Türkiye: Continuing to accept exchange rate depreciation would perpetuate hyperinflation situation – Natixis

How can Türkiye get out of hyperinflation? Continuing to accept exchange rate depreciation means perpetuating the inflation-exchange-rate depreciation loop, analysts at Natixis report.

How can inflation be sharply reduced in Türkiye?

The solution that has been used successfully is to: Move to a fixed exchange rate regime against the Dollar, in a credible and irreversible manner, thereby lowering inflation expectations; Bear the cost of disinflation, i.e. accept the loss of production that results from the slow disinflation relative to the fixed exchange rate.

Continuing to accept exchange rate depreciation would perpetuate the hyperinflation situation.