The Central Bank of the Republic of Turkey (TCMB) announced its highly anticipated interest rate decision, raising the policy rate by 250 basis points to 42.5%. This increase follows a series of hikes that began in June, with the cumulative rise reaching 3,400 basis points over seven months, marking a 34% increase in the interest rate.
Economists surveyed by AA Finance had predicted this outcome, aligning with the Central Bank’s policy direction. The decision to increase the policy rate to 42.5% was in line with market expectations, reflecting the Central Bank’s response to economic conditions.
Meanwhile, the cryptocurrency market, particularly Bitcoin, has been experiencing fluctuations. The anticipation of a spot Bitcoin ETF from the US has driven the market upwards, with Bitcoin’s price reaching over $44,000 on December 20 before retracting due to a sharp decline in US stock markets. During the Asian trading session, Bitcoin approached the $44,000 mark again, trading at $43,911 against the US dollar at the time of writing.
The rise of Bitcoin against the US dollar and the Turkish lira’s depreciation have led to Bitcoin continuously setting new records in Turkish lira terms. Current data shows a 2.78% increase in Bitcoin’s value against the Turkish lira over the last 24 hours, reaching a level of 1.28 million lira.
The recent increase in the TCMB’s interest rate to 42.5% and the shift to a real positive interest rate for the first time since November 2021 have left the future value of the Turkish lira uncertain. Similarly, whether Bitcoin will decrease in value against the Turkish lira remains to be seen. However, the general sentiment suggests that due to Bitcoin’s strength against the US dollar, the Turkish lira may not stand much chance against BTC.
The Central Bank’s actions and the ongoing trends in the crypto market continue to influence the financial landscape, with the Turkish lira’s performance against Bitcoin being a point of focus for both investors and economists.