Turkish currency slides to new low against euro

ISTANBUL - Agence France-Presse

The Turkish lira sank to yet another record low against the euro on Jan. 22, the day after the central bank decided against hiking interest rates to prop up the currency.

The lira, which has shed 10 percent of its value since a political crisis erupted last month, was trading at 3.0652 to the euro from 3.0583 at Tuesday's close and at 2.2602 to the dollar from 2.2575 but above lows of 2.2659.

The stock market however made gains, with the Istanbul exchange's main index up 1.02 percent to 66,992.81 points.

Analysts say further falls are on the cards for the currency, under pressure not only from the corruption scandal rocking the government but also a tightening of U.S. Federal Reserve policies.

Istanbul-based Finansbank said the decision by the central bank - which is statutorily independent -
was a "smoke and mirrors" policy which had confused the markets.

Although it held all its key rates steady, including the overnight rate at 7.75 percent, it suggested there could be some monetary tightening on certain days, when the rate could rise to nine percent.

The government is opposed to any increase in interest rates as it tries to boost current tepid economic growth rates and keep a rein on inflation.