In recent weeks, concerns that the Federal Reserve might begin adjusting its rate of asset-purchases in the months ahead put emerging-market currencies like the Lira under pressure.
At the current Exchange Rate one US Dollar is worth 1.9065 Turkish Lira as of 13:00 GMT
Consequently, many industry experts were expecting that the Turkish central bank would raise interest rates when it met today in order to support the flagging currency.
Prior to the announcement of the decision the Lira strengthened to 1.9122 and Barclays stated: ‘In Turkey, an economy with a large current account deficit and inflation far above target, the central bank was forced to signal rate hikes in a written statement.’
Meanwhile economist Yarkin Cebeci observed: ‘A wide interest rate corridor was quite influential in stabilising the currency in the first half of 2012 because this scheme allowed the bank to increase its effective funding rate significantly without actually hiking rates.’
The US Dollar to Lira Exchange Rate Hit a High of 1.9180 (USD/TRY)
Expectations were answered as the Turkish central bank increased the overnight lending rate by 75 basis points, taking it from 6.5 per cent to 7.25 per cent.
The one-week repo policy rate was left at 4.5 per cent.
The borrowing rate was unchanged at 3.5 per cent.
After the decision was announced the Lira fluctuated slightly but was largely little changed against the US Dollar.
Other Turkish news of interest this week includes the nation’s gauge of business confidence, due for publication on Thursday.
Economists have forecast that the gauge declined from 111.8 in June to 110.53 in July.
Further movement in the USD/TRY pairing could occur today in reaction to US housing data.
Current Turkish Lira (TRY) Exchange Rates
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The Pound Sterling/ Turkish Lira Exchange Rate is currently in the region of: 2.9361 >
The Euro/Turkish Lira Exchange Rate is currently in the region of: 2.5198 >
The US Dollar/Turkish Lira Exchange Rate is currently in the region of: 1.9065 <
The Japanese Yen/Turkish Lira Exchange Rate is currently in the region of: 0.0198 –
(Correct as of 13:00 GMT)
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