A first in 5 months for the Turkish Lira: Real value declines

The Central Bank of the Republic of Türkiye (CBRT) has announced the CPI-based real effective exchange rate index data for August. The Turkish Lira real exchange rate index has shown a decline for the first time in five months; the decrease was at the 1.0 percent level.

According to the data published by the Central Bank, the real effective exchange rate index was calculated at 62.34 points on a CPI basis in August. Thus, the real exchange rate experienced its first decline since March.

The CPI-based real exchange rate index for July was revised from 62.90 points to 62.97 points. 

The D-PPI-based real effective exchange rate index fell by 2.1 percent in August to 92.75 points. The previous month's index remained unrevised at 94.69 points.

The real effective index based on emerging economies moved from 20.92 points to 50.61 points, while the real effective index based on developed economies moved from 72.52 points to 71.52 points.

WHAT IS THE REAL EFFECTIVE EXCHANGE RATE?

The real effective exchange rate refers to changes in the purchasing power of the Turkish Lira. An increase in the real effective exchange rate indicates that the Lira has gained value and that the price of Turkish goods in terms of foreign goods has increased. A decline in the rate indicates that the price in terms of foreign goods has decreased.

News Source: 12punto