A picture shows the logo of Turkey's Central Bank (TCMB) at the entrance of the bank's headquarters in Ankara, Turkey. (AFP)

Turkish sources reported on Tuesday that the Central Bank of Turkey is likely to announce in the near future an increase in the key interest rate from 8.5% to as high as 40% this week.

The measure will aim to support the depreciating Turkish lira, reports say.

According to the Turkish-based Milliyet paper, experts are expecting that the Central Bank will increase the interest rate by 15-20% this week.

Some suspect that an additional 5% will be added within the next two meetings, while others believe that the Bank may instead implement a one-time hike to 30-40%.

The move is intended to encourage an influx of foreign investments into the Turkish economy in order to restore trust in the Turkish lira's value, the report added.

Since the beginning of the week, the national currency against foreign currencies has struggled to recuperate, with the US dollar reaching a new high of 23.63 lira per dollar Tuesday.

At the beginning of this year, the price of a dollar was at 18.73 Turkish lira. Before the first round of the presidential election on May 1, it rose to 19.6 lira and accelerated after it.

Despite the Lira's decline, earlier reports indicate that the Turkish central bank has kept its benchmark interest rate at relatively low levels over the past two years. In early 2021, the rate was set at 19%. It decreased to 8.5% in February this year and continues to be at that level ever since.

Turkish President Recep Tayyip Erdogan, who was recently re-elected for a third term, announced on Saturday the appointment of former Merrill Lynch economist, Mehmet Simsek, as finance minister.

Simsek formerly served as a finance minister and deputy prime minister in past governments ruled by Erdogan's AKP and is known for opposing the Turkish leader's economic policy to slash interest rates amid rising inflation.

During the term of former central bank chief Sahap Kavcioglu, the interest rate was lowered to 8.5 percent after being 19 percent in 2021.

In May, the country's inflation rate dropped to under 40 percent, a 16-month low.

Erdogan began curring interest rates to keep investment cheaper and growth more possible, but after inflation started running wild by hitting an estimated 85% annual rate late last year, the president was keen on keeping interest rates low to attract more growth. Unfortunately, that came at the price of the Turkish lira which plummeted gravely.