As the Russian-Ukrainian war continues, Western sanctions against Russia continue to escalate, which will undoubtedly deal a fatal blow to countries that have not yet recovered from the impact of the epidemic.

Data show that Turkey’s foreign reserves have fallen to $60 billion, and the data pointed out that Turkey’s foreign debt reached $441 billion at the end of the fourth quarter of 2021, far exceeding the level of foreign reserves.

The lira has traded within a range of 14.50 to 1 to 15.00 to the dollar over the past two months. Currently, the lira is trading at 16.4477 against the US dollar. The lira has fallen nearly 60 percent against the dollar since 2021.Turkish economist Murat Saman said the devaluation of the lira will trigger more severe inflation in the coming period. 

The latest data released by the Turkish Statistical Institute showed that Turkey’s consumer price index (CPI) rose by 73.5% in May compared with the same period last year, setting a record since October 1998. Among them, the transportation price increased by 107.62% year-on-year, which was significantly higher than the overall inflation level of the month.

In addition to the CPI, Turkey’s Industrial Producer Price Index (PPI) soared by 132%. The biggest factors driving the latest inflation surge are food and energy, exacerbated by rising global commodity prices and the conflict between Russia and Ukraine.

In the face of rising inflation and a rising economy, Turkey’s central bank has kept its benchmark interest rate unchanged for five consecutive months since January.

Turkey’s credit rating has now been significantly downgraded and its weight in the most closely watched local currency emerging market bond index GBI-EM has dropped from 10% to 1%