The Turkish lira rose a little versus the US dollar and traded sideways against the euro following yesterday’s decision of the Turkish central bank to hold interest rates steady.
The Central Bank of the Republic of Turkey decided to keep borrowing costs unchanged, including the benchmark overnight interest rate that remained at 10.75 percent. The central bank was talking about possibility of tighter monetary policy, but experts consider monetary tightening unlikely. Weak inflation (due to falling food and energy prices) and pressure from the government to cut lending rates makes higher rates highly improbable.
The lira has fallen 19 percent so far this year, being one of the worst-performing currencies of emerging markets. The reason for such underwhelming performance was that Turkish assets held little attraction for overseas investors due to political uncertainty and clashes between Turkish army and Kurdish PKK militants.
USD/TRY ticked down from 2.8945 to 2.8927 as of 00:45 GMT today. EUR/TRY was near its opening of 3.1916.
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