ANKARA: The embattled Turkish lira fell sharply against the dollar on Thursday after the central bank disappointed markets expecting a substantial interest rate hike with only a minimal increase.
The lira — which has lost over 30 percent in value against the dollar over the last two years — fell 1.62 percent in value to trade at 3.87 to the greenback.
The market consensus had been for a 100 basis points rate hike of the benchmark interest rate to combat inflation of almost 13 percent and the weakness of the lira, at a time of strong growth.
But the central bank left the benchmark repo rate unchanged at 8.0 percent, it said in a statement after its latest monetary policy meeting.
The overnight borrowing rate was also kept unchanged at 7.25 percent while the marginal funds rate held steady at 9.25 percent.
But the late liquidity window lending rate was hiked, however, by 50 basis points to 12.75 percent from 12.25 percent. This was the only interest rate to be hiked.
The central bank employs multiple interest rates — which if often changes at different times — in a complex monetary policy strategy which has been criticised by economists.
Source: Brecorder.com
