Turkish Lira eases as rate cut expectations decline after officials’ comments

ISTANBUL

REUTERS photo

The parity between the U.S. dollar and Turkish Lira eased slightly on Oct. 19, as expectations about a fresh rate cut by the Turkish Central Bank decreased. 

The lira, which has weakened more than 5 percent against the dollar since the start of the year, chalked up some of its biggest gains, rising 0.6 percent and pulling away from recent record lows early Oct. 19, becoming the best performing emerging currency after the Russian ruble. 

The lira eased to around 3.0761 after hitting new record lows on Oct. 18 at around 3.10, making the lira the only emerging currency to have lost value on the day. 

Policymakers at the Central Bank will meet on Oct. 20, and many analysts now expect the bank will stop cutting rates for a while after remarks by several officials, including President Recep Tayyip Erdoğan’s economy advisers. 

“The Central Bank narrowed the rate corridor and cut rates for a long times. The Central bank knows what to much better than us…If it needs to stop cutting rates, it will,” said Erdoğan’s adviser Yiğit Bulut, Bloomberg HT reported Oct. 19. 

Another adviser of Erdoğan, Cemil Ertem, said last week that the rate decisions of the Central Bank were not automatic. 

The Central Bank cut a key interest rate for the seventh month in a row last month in a bid to boost the economy.