-1.3 C
New York
Monday, January 24, 2022

Turkish lira firm as markets bet rates will be kept on hold

Turkish lira firm as markets bet rates will be kept on holdISTANBUL: The Turkish lira firmed slightly on Tuesday as markets bet that the central bank would resist pressure from President Tayyip Erdogan and keep interest rates on hold later in the day.

Twenty out of 21 economists polled by Reuters expect the bank to leave its policy rate, the one-week repo rate, unchanged at 7.5 percent when it announces its decision at 1200 GMT.

“The central bank needs to restore its credibility,” said Ozgur Altug, chief economist at BGC Partners.

Erdogan, a vocal advocate of low interest rates to promote growth, has repeatedly lashed out at the bank’s failure to aggressively cut in the run up to a June parliamentary election.

But key ministers have voiced support for the bank in recent days, including Finance Minister Mehmet Simsek who said at the weekend that the bank’s credibility needed to be strengthened.

Altug noted that politicians’ reaction to the rate decision, as well as the outcome on Wednesday of a U.S. Fed (FOMC) policy meeting and a ratings review by Fitch due on Friday would be key to the market’s direction in the coming days.

The lira was around 0.2 percent firmer against the dollar by 0921 GMT, in line with many other emerging markets currencies. The main Istanbul stock index was up 0.9 percent, just outperforming peers.

Erkin Isik, strategist at TEB-BNP Paribas in Istanbul, said he expected the central bank to keep all of its main interest rates on hold but to maintain tight liquidity conditions.

“(The lira) is likely to benefit from such a decision relative to emerging markets peers but risk sentiment towards EM assets is unlikely to strengthen significantly before the FOMC decision tomorrow,” he said in a note.

Copyright Reuters, 2015

Related Articles


Please enter your comment!
Please enter your name here

Stay Connected

- Advertisement -

Latest Articles

Popular Articles