Turkey to See Massive Inflation Rise

Turkey’s finance ministry announced in a meeting with economists that it expects inflation to reach highs of 40% during 2022.

The country’s inflation rate touched 36.1% in December 2021 and is not expected to go below that level at any point this year.

Finance Minister Nureddin Nebati told attendees that the rate is not expected to pass 50%, although some analysts believe it could well breach that mark.

Consumer prices rose sharply last year after Turkey’s central bank cut its benchmark rate by 500 basis points four times in a row. Policy makers in the country believed lower interest rates would reduce consumer prices and drive growth. 

However, driven by the Turkish lira’s depreciation, coupled with surging global energy prices, inflation continued to rise. Last year, the lira lost half its value in three months before stabilizing after the government introduced emergency containment measures. 

What does this mean for me?

As a FOREX trader, it pays to understand the events that drive the currency strength behind minor and exotic currencies. In the case of the lira, the outlook points to a tough year for the currency, with further depreciation in the cards.

Armed with this information, you can plan your trading strategy accordingly. While minor and exotic currencies are known for their volatility, they can also offer you good chances to make some profits if you take well-informed positions relating to their prospects.