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.
- 1Japan: a world leader in disaster prevention
- 2GDP grows but current account deficit near record high ahead of UK election
- 3Germanwings crash likely to lead to a near-300-million-euro insurance claim
- 4Italy slumps while Germany forges ahead – the eurozone’s unemployment patchwork
- 5Yemen conflict’s impact on Gulf markets
- 1Greek reforms fail to convince investors as deadline day creeps closer
- 2Greece sends revised reforms list to creditors for approval
- 3Greeks flock to take advantage of forgiveness for tax fines
- 4Eurozone economy breaths a sigh of relief
- 5Markets fear Saudi-led military action in Yemen will choke oil delivery to Europe and US
- 1Global gold price setting arrives in the 21st century
- 2Russian foreign currency mortgage holders cry foul over soaring rates
- 3Greece sends revised reforms list to creditors for approval
- 4Winners and losers of the “Mini Euro”, Facebook moves into news
- 5Greeks flock to take advantage of forgiveness for tax fines
- 1euronews live TV - News | euronews : the latest international news as video on demand
- 2Russian rumour mill suggests Putin suffering poor health | euronews, world news
- 3Slovenia becomes 11th EU nation to approve gay marriage | euronews, world news
- 4[LIVE] Germanwings passenger jet crashes in southern France, 148 people on board – authorities | euronews, world news
- 5Indian rapist says women to blame for being sexually assaulted | euronews, world news
- 6Exclusive: CIA and Mossad are behind Boko Haram and ISIL, says Sudan president | euronews, world news
- 7International news | euronews, latest international news
- 8French Alps plane crash treated as suicide and mass murder by co-pilot | euronews, world news
- 9Why is Bulgaria the EU’s most unhappy country? | euronews, world news
- 10eurovibes - a selection of Europe’s best music talent
- 11Greece’s claim for war reparations from Germany explained | euronews, world news
- 12Reaching new heights: Parents in India scale walls to ‘help students cheat’ | euronews, world news
- 13Tens of thousands march in Moscow in memory of Boris Nemtsov | euronews, world news
- 14Handwriting and the digital age, time for change in schools? | euronews, learning world
- 15London calling: why home-loving Hungarians are flocking to British capital | euronews, reporter
- 16French prosecutor: Germanwings co-pilot appears to have crashed plane deliberately | euronews, world news
- 17Manufacturing jihad – Nicolas Hénin explains what he learned about ISIL | euronews, the global conversation
- 18Germanwings press conference mystery: what wasn’t he supposed to say? | euronews, world news
- 19Which EU country has the biggest gender pay gap? | euronews, world news
- 20Romania left red-faced after France-Germany map gaffe | euronews, world news
Wires > Business
- 04:10 CET Recovery in Japan business mood stalls, capex to be cut – …
- 04:06 CET New York court dismisses foreclosure lawsuit against HSBC
- 02:13 CET Some EU farmers welcome end of milk quotas but others fearful
- 01:51 CET Exclusive – GoDaddy IPO values company at $4.5 billion
- 01:32 CET Hamleys opens its largest toy store in Moscow despite economic…
- 00:17 CET China not quite ready for IMF currency basket, U.S. says
- 22:14 CET Asia Resource Minerals targets end June to complete…
- 21:47 CET U.S. approval moves Shell a step closer to Arctic drilling