Turkey Leverages Managed Exchange Rate to Combat Inflation and Protect Lira

Turkish authorities are increasingly relying on a managed exchange rate as a cornerstone of their broader disinflation strategy. According to analysts at ING, this policy response is designed to mitigate the economic risks stemming from high energy price volatility and geopolitical tensions. Turkey remains highly sensitive to global energy market shifts, which complicates the central bank's efforts to stabilize domestic prices. The current approach aims to anchor inflation expectations by maintaining a controlled trajectory for the Lira against major currencies. While the managed rate provides a semblance of stability, the underlying exposure to external shocks remains a significant concern for international investors. Market participants are closely watching the effectiveness of this strategy in the face of ongoing regional uncertainties and fluctuating energy costs.