Turkish lira is declining sharply for this year

Turkish Wall Street Citigroup and JPMorgan banks were the latest to expect the Turkish central bank to raise interest rates next week to stabilize the currency and deal with Inflation, Which crossed 15 percent last month.

After raising interest rates to 17 percent in December, central bank governor Nagy Iqbal said on Friday “We will take decisive steps” In order to stabilize the inflation rate, which reached double digits. He added that “Systematic shift” It happened in November when he took over the presidency of the bank.

By 17:15 GMT, the Lira was down 3.3 percent at 7.7750 against the dollar, its lowest level this year..

Said Tatha Jose, chief market economist at Commerzbank “The market interpreted it as a promise to raise interest rate Soon again, in order to establish more credibility. We, too, believe another 100bp rate hike is likely at this month’s meeting”.

Turkey already has the policy for the highest interest rate of any developed or developing country, and interest rate cuts are expected later in the year. In a blog post, Iqbal’s comments on Friday were seen by some as an indication that the bank will start raising interest rates.

For Turkey, which is import-dependent and produces almost none of its energy needs, a lower lira raises the cost of imports. US crude hit its highest level in more than two years after the Houthi attacks on Saudi facilities.

Banks Citi and JP Morgan said they expected interest rate increases of 50-100 basis points and 100 basis points, respectively..

U.S. 10-year Treasury yields are at their highest in a year, which is pulling money out of riskier emerging markets like Turkey, whose assets are particularly volatile.



Arab Observer

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