The Turkish Lira continued its seemingly unstoppable decline against the Pound and fell to another new record low against the US Dollar after the Turkish Central Bank announced that it had left interest rates unchanged.
The Turkish Lira has been under immense pressure due to political unrest spooking the markets and the Federal Reserve’s decision to taper its quantitative easing programme which had supported the Lira. Concerns are also high regarding Turkey’s large current account deficit which has also taken a toll.
Investors are growing increasingly concerned over the Lira’s rapid decline and Turkey’s worrying inflation expectations. The Turkish Central Bank decided to leave interest rates unchanged at 4.5% in a decision that was widely expected. Despite that the market was unimpressed and once again investors resumed their rout out of the Lira.
The Turkish government had been piling pressure onto the Central Bank to retain rates. The nation’s economic minister was quoted as saying that rates must be kept on hold as an ‘increase would have consequences, and would create a permanent bill for our economy.”
The currency’s decline was triggered in December when political unrest erupted after an investigation into government corruption resulted in the resignation of three prominent cabinet members. Prime Minister Erdogan is currently engaged in a power struggle with a former ally, the Islamic scholar Fethullah Gulen, who has many supporters within Turkey’s judiciary and police force.
The Lira is likely to continue to post more declines in tomorrow’s session if US jobs, PMI and housing reports come in positively. Strong data will strengthen the ‘Greenback’ and expectations for the Fed to resume tapering its easing programme a move that will weigh heavily upon the Lira.
Current Turkish Lira (TRY) Exchange Rates:
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,Turkish Lira,3.0511 ,
Pound Sterling,,Turkish Lira,3.7041 ,
US Dollar,,Turkish Lira,2.2553 ,
Australian Dollar,,Turksih Lira,1.9829 ,
[/table]
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