Turkish Central Bank calls emergency meeting as lira falls

ANKARA - Agence France-Presse

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The Turkish Central Bank said today it would hold an extraordinary meeting on Jan. 27, as the local currency continues to fall against the dollar and the euro. "The Monetary Policy Committee is to convene on January 28 to evaluate recent developments and take precautions which are necessary for price stability," the bank said in a statement.

The bank, which intervened heavily in the foreign exchange market to support the lira last week, is fighting hard with intervention to defend the lira while under strong political pressure not to raise interest rates.

Last week, the Central Bank ploughed at least $2 billion (1.5 billion euros) into the foreign exchange market in an unsuccessful attempt to prop up the lira.

The Turkish currency has been hitting record lows almost daily this year, under pressure from an escalating political crisis over a corruption scandal roiling the government as well as concerns about the economy.

The lira sank to another low of 2.3616 to the dollar and 3.2345 to the euro in morning trading on Jan. 27. 

The currency also saw all-time low against a euro/dollar basket at 2,8246.

The Istanbul stock exchange main index, meanwhile, lost by around 1 percent to reach below 63,800 points.

The fall of the lira is rooted in an escalating political crisis and concerns about the economy. But government officials have played down the impact of the crisis on the economy as being only “temporary.”

The Central Bank has so far refrained from raising interest rates to defend the lira amid government concerns that any rise in rates could jeopardize the growth target.

The government has been forecasting that growth will pick up from an expected rate of 3.6 percent in 2013 to 4.0 percent for this year, still down from more than 8.0 percent achieved in 2010 and 2011.