This is not financial advice ! This year, there has been a lot of negativity surrounding the Turkish Lira, so as the end of the year approaches, I thought I'd take a look at how it has performed for 'investors' in the last twelve months.

In January this year, 'investors' could buy 1,000 000 TRY for £26,688. If this amount was placed in an interest bearing deposit account with a local Turkish Cypriot Bank, the attached graphic tracks how the 'investment' performed throughout the year.

The Turkish Lira exchange rates are the rates that were available on the first day of each month throughout the year. The actual figures for December are not yet available. The figures in orange therefore, are best guesses, but they should be fairly close to the eventual figures.

At the end of the year, an 'investor' who purchased 1,000 000 TRY would see that with interest, 1,466 145 Turkish Lira has accumulated which using the exchange rate from the beginning of December, equates to £33,321. The initial amount that an 'investor' had to 'invest' was £26,688 and anyone who did, saw a capital increase of £6,633. A 24.85% gain on the amount of the initial 'investment' in UK Sterling LESS the loss in value (purchasing power) resulting from the rising rate of inflation over the last twelve months.

Part of our retirement plan includes generating an income from our capital. There are several ways that we could have done this, but we chose, like many other British Expatriates, to change UK Sterling to Turkish Lira and deposit it with a North Cyprus Bank to earn a monthly income from the interest that it generates. I am purposely not calling this an investment, because it isn't, its a risk and each time that we changed UK Sterling into Turkish Lira, we accepted that the value of the Turkish Lira may depreciate against UK Sterling and that this amount may exceed the amount of monthly interest that we earn.

Yesterday, I was Informed by our Bank that the monthly interest rate on our Turkish Lira deposit account is to be reduced by 4%. I was rather surprised to hear this, especially as last month, Turkiye Central Bank's Monetary Policy Committee left interest rates unchanged at 50%.

Many market analysts expect the interest rate to remain unchanged until the Bank's January meeting when they predict that the Monetary Policy Committee will begin to reduce the interest rate and continue to do so steadily throughout 2025.

Today, we made a few calls and visited several banks to see what was being offered by some of the other banks and we managed to secure a deal that is 3% less than last month's rate. We were also offered a deal that was just 2% less than the rate that we received last month, but unfortunately, this involved a lot of form filling so we decided against accepting the offer.

In deciding not to take the best offer, the main consideration was the level of customer service that we have received from the bank that we decided to stay with. In the past, it has been exemplary.

After today's experience, we do feel however, that interest rates are now on a downward trajectory.

Tomorrow, we are going to take a look at an alternative capital investment option which may pay a little more interest than a Turkish Lira deposit account, but we need to investigate and assess the risk involved.

This is not about being greedy for an extra one, or two percent interest, it is about insulating capital against loss in value as a result of high inflation.

The next meeting of Turkiye Central Bank's Monetary Policy Committee is on the 21st November.