According to sources directly familiar with the matter, Bank of Turkey Governor Fatih Karahan said during a meeting with investors in Bangkok that Turkey allows the lira to depreciate more rapidly to avoid a larger depreciation in the long run. According to people familiar with the matter, Karahan said when explaining why the adjustment was chosen at this time that economic activity is also weakening, the transmission effect of exchange rate depreciation to inflation has weakened. Due to the content of the closed-door meeting, people familiar with the matter requested anonymity. Karahan is currently attending the International Monetary Fund and World Bank annual meetings in Bangkok. Turkey's central bank declined to comment. People familiar with the matter said that during the talks, Karahan emphasized the importance of maintaining a sustainable exchange rate framework. He pointed out that his term of office will end in February 2028 and expressed the hope that his successor would not consider it necessary to carry out a devaluation at that time, thus erasing all progress made so far. People familiar with the matter said Karahan said that adjustments to the rate of depreciation of the lira need to ensure that local savers and households still find the return of holding lira assets attractive.

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