The Turkish central bank performed a significant interest rate hike yesterday following the big drop of the Turkish lira. So far, the currency did not respond to the action in any noticeable manner.
The Central Bank of the Republic of Turkey performed a significant rate hike by 75 basis points to 7.25 percent. The central bank explained:
Recently, several developments have affected inflation adversely.
Under such circumstances, “a measured monetary tightening is deemed necessary in order to contain a deterioration in the pricing behavior”, which also “will support financial stability”. Moreover, the bank suggested that “additional monetary tightening will be implemented when necessary”. The statement also said:
Cautious stance will be maintained until the inflation outlook is in line with the medium term targets.
The lira reached the record low this month and was one of the worst-performing currencies this year. The currency remains soft so far despite the central bank’s action.
USD/TRY rose from 1.8999 to 1.9016 as of 1:48 GMT today. EUR/TRY fell a little from 2.5129 to 2.5120.
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