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.
- 1Dubai’s ancient dhows look east to Iran and an end of sanctions
- 2IMF says Greek debt unsustainable without easier terms
- 3Industrial symbiosis in Kalundborg: turning waste into a resource
- 4Grisis: Grexit after the Greferendum
- 5Swedish interest rates go negative as economy grapples with contradictions
- 1euronews live TV - News | euronews : the latest international news as video on demand
- 2Spain’s first case of diphtheria in 30 years: parents of six-year-old ‘oppose vaccines’
- 3Greek debt crisis is “absolute supremacy of capital over humans”
- 4[Live updates] NGO flotilla bids to break Israeli blockade of Gaza
- 5[LIVE UPDATES] Greek debt deadline looms
- 6Large Hadron Collider ready to embark on an unprecedented voyage of discovery
- 7Istanbul Gay pride quashed by riot police, rubber bullets and water cannon
- 8[LIVE UPDATES] France: man decapitated, several wounded in chemical plant attack
- 9Israel prepares to repel boarders as ‘Freedom Flotilla 3’ tries to run Gaza blockade
- 10Greek debt summit – Live updates
- 11‘Distractingly sexy’ scientists hit back in lab chemistry polemic
- 12Romania, Hungary and Bulgaria focus of EU cash fraud probes
- 13NewsWires : euronews : the latest international news as video on demand
- 14Summit up in Brussels as Greek proposals give food for thought and rumours fly
- 15Interpol issues ‘red notice’ for accused ex-FIFA bosses
- 16Battle of Waterloo, live-tweeting 200 years on
- 17Greek PM faces day of crucial bailout talks in Brussels
- 18Citizens take power in Spain’s largest cities as a political revolution sweeps the country
- 19Italy discovers biggest illegal waste dump in Europe
- 20Greek debt: who will pay if Greece fails?
Wires > Business
- 21:03 CET Oil slides in thin trade on rising U.S. rig count
- 20:18 CET Fiat Chrysler CEO says no news on approach to GM but consolidation…
- 19:22 CET Ferrari listing to value group at least 10 billion euros – CEO
- 18:31 CET Exclusive – Hospira wins French biosimilar drug tender at 45…
- 18:09 CET Any ‘new drachma’ would sink like a stone at first
- 17:44 CET UK to curb protection for savers, blames EU rules
- 17:32 CET Greek cliffhanger brings Sunday shift for some London traders
- 17:26 CET Italy economic recovery is weakening, statistics office says