A magnitude 7.8 earthquake struck central Türkiye and northwestern Syria on the afternoon of February 6, killing about 4,300 people, injuring nearly 14,500 and destroying 5,600 homes. It is considered the strongest earthquake to hit Turkey in more than a decade and is one of the reasons for the sharp decline in the lira.

Experts fear the earthquake will have a major impact on the country’s population and economy . Although the economic damage has not yet been quantified, the US Geological Survey estimates that the Turkish economy could lose about 2% of its Gross Domestic Product (GDP).

Emerging market currencies fell against the US dollar on February 3 after the US released a strong jobs report, suggesting the US Federal Reserve (FED) could continue to raise interest rates.

The Turkish lira last hit a record low of 18.84 lira per dollar on December 26, 2022. The currency has weakened nearly 1% since the start of 2023.

In addition, inflation is also a factor contributing to the depreciation of the domestic currency. Inflation in Türkiye has been increasing steadily since May 2021. Turkish households have gradually lost purchasing power despite government measures such as salary increases.

Türkiye is experiencing its worst financial crisis in decades, with the lira falling steadily since the COVID-19 pandemic. The conflict between Russia and Ukraine has also worsened the situation, pushing energy prices to new highs. Geopolitical tensions have risen again recently, as Washington has warned that Ankara is increasing its exports to Russia, which Washington says is helping Moscow prolong the conflict in Ukraine./.

H.Ha (Reuters, US News)