The Turkish lira has strengthened after the central bank raised one of its interest rates to support the currency.
Bank officials also said they would, if necessary, take further steps to stop the lira from falling.
The overnight lending rate was put up to 7.25 percent from 6.5 percent. Raising that rate increases the real interest rate on lira assets and makes them more attractive to foreign investors, supporting the currency. Whether that in itself will be enough remains to be seen.
The move was in response to capital outflows that have knocked the value of the lira down as much as nine percent against the dollar, despite attempts by the central bank to prop it up.
The lira has been weakened by uncertainty over the US Federal Reserve’s bond-buying stimulus programme and by widespread public demonstrations against the government last month.
The bank kept other rates – such as its one-week repo policy rate and its benchmark borrowing rate unchanged.
It is a major reversal by the central bank, which two weeks ago was railing against what it called the ‘interest rate lobby’ which it said was conspiring to manipulate interest rates.
At that time it steadfastly refused to use a shift in interest rates to support the lira.
Prime Minister Tayyip Erdogan has long championed low interest rates, fearing an economic slowdown ahead of elections, but the central bank has already burned through $6.6 billion (five billion euros) of its reserves to try and boost the lira, a policy it cannot pursue indefinitely.
Reassurances from Fed Chairman Ben Bernanke last week over the pace of the US central bank’s plans to withdraw monetary stimulus have boosted sentiment in emerging markets, lending support to the lira in recent days and taking some pressure off Turkey’s central bank.
It nonetheless followed other emerging markets in lifting rates. Last week, India joined Brazil and Indonesia in raising some of its interest rates to try to prevent a rout of its currency.
- 1Chomsky says US is world’s biggest terrorist | euronews, the global conversation
- 2euronews live TV - News | euronews : the latest international news as video on demand
- 3Chomsky – a rebel with a cause | euronews, world news
- 4Anti-ISIL demonstrations turn violent in Ethiopia | euronews, no comment
- 5The migrants tragedy in the Mediterranean sparks creative satirical response | euronews, world news
- 6Europe is ‘bluffing’ over Greece-Russia relations – analyst | euronews, news
- 7French Alps plane crash treated as suicide and mass murder by co-pilot | euronews, world news
- 8Woman carries can of water on her head along Paris marathon | euronews, world news
- 9Former IMF chief ‘under investigation for money laundering’ | euronews, world news
- 10International tv news | euronews: European and International tv news bulletin
- 11Pope Francis washes Rome prisoners’ feet on Holy Thursday | euronews, world news
- 12ECB chief Mario Draghi unhurt after protest during speech | euronews, world news
- 13International news | euronews, latest international news
- 14eurovibes - a selection of Europe’s best music talent
- 15Portuguese researchers discover the secret of Mind Control | euronews, futuris
- 16Indonesia executes five foreigners despite protest | euronews, world news
- 17French prosecutor: Germanwings co-pilot appears to have crashed plane deliberately | euronews, world news
- 18International breaking news | euronews online world breaking news in video
- 19Fighting Boko Haram: Chad aims to ‘destroy’ militant group | euronews, world news
- 20Energy-generating clothes and smart lights join the Internet of Things | euronews, hi-tech
Wires > Business
- 13:35 CET Pop Milano sits pretty as Italy cooperative banks brace for M&A
- 12:38 CET India’s Ratan Tata buys stake in Chinese phone maker Xiaomi
- 11:53 CET Nokia denies return to phone manufacturing
- 10:44 CET Ryanair boss eyes 10-15 percent cut in fares in next two years
- 10:09 CET Analysis – If Greece falls, no one wants their prints on the…
- 06:25 CET Cuts to pay and perks trigger flight from China’s state banks
- 05:32 CET Germany hints at preparations of a Plan B on Greece
- 02:48 CET Greece, lenders must reach deal by early May, Deputy PM tells paper