REAL EFFECTIVE EXCHANGE RATE INCREASES BY 6.4%

The Consumer Price Index (CPI), based real effective exchange rate (REER), increased by 6.4% (3.97 points) to 66.28 in January compared to December 2020, according to provisional data of the Central Bank. REER stood at 62.31 in December last year. Meanwhile, CPI developing countries based REER rose by 3.91 points to 55.99 and CPI developed countries based REER increased by 3.74 points to 73.14 in the same period. The Domestic Producer Price Index (D-PPI) based REER also rose by 5.13 points to 78.63 from 73.50 in January, compared to December 2020. The value of the TRY declined by 9.43 points on a CPI basis and 2.52 points on D -PPI basis in January 2021, compared to the same month of the previous year. The effective exchange rate is an indicator of a country’s international competitiveness in terms of its foreign exchange rates that cannot be by examining only individual exchange rates between the domestic currency and other currencies.