Turkish lira at highest real value in last 5 years: CBRT

The Turkish lira’s real value reached its highest level since March 2020, as the real effective exchange rate (REER), which measures the strength of a country’s currency, surged by 2.97 points to 75.44 in January, based on the consumer price index (CPI).

According to data released by the Central Bank of the Republic of Türkiye (CBRT), the CPI-based REER index, with 2003 as the base year (100=2003), rose to 75.44 last month, up from 72.47 in December 2024.

During the same period, the producer price index (PPI)-based REER increased by 2.30 points, rising from 96.73 to 99.03. Compared to the same period last year, the Turkish lira gained 13.99 points in CPI-based REER and 10.41 points in PPI-based REER.

Inflation to subside, monetary policy to ease

The real appreciation of the Turkish lira aligns with Türkiye’s disinflation program, which has been in place since May 2023. Under this program, the country’s annual inflation has been declining steadily since June 2024, falling from its peak of 75.5% in May 2024 to 42.1% in January 2025.

Meanwhile, the CBRT cut interest rates by 250 basis points in December, marking the first rate cut in nearly two years since its previous reduction on Feb. 22, 2023. The central bank followed up with another 250-basis-point cut in January, lowering the policy rate from 50% to 45%, in line with the declining inflation trend.

As the disinflation process continues, with both the CBRT and the Turkish government prioritizing price stability amid global economic uncertainties, the real appreciation of the Turkish lira is expected to strengthen further in the coming months.