Turkish central bank says ready to act on lira volatility
Turkey’s central bank said it is ready to act when necessary to stabilise the lira after the currency fell on concern that lower inflation may prompt it to cut interest rates.
The bank’s policymakers will not stand by should moves in foreign exchange rates detach from economic fundamentals or permanently impact price stability, the central bank said on Wednesday in a report outlining its monetary and exchange rate policy for 2019.
Turkey’s lira has slid since the close of trading on Thursday on concern that the central bank might lower its benchmark interest rate of 24 percent as inflation slowed. The rate of inflation fell to 22.6 percent in November from 25.2 percent the previous month, the Turkish Statistical Institute said on Monday.
The lira gained 0.7 percent to 5.35 per dollar at 12:15 p.m. in Istanbul, reversing losses of as much as 1 percent earlier, and trimming declines over the past four days to about 3.5 percent.
The central bank, under pressure from the government to keep interest rates low to help stimulate economic growth, had belatedly hiked rates by 625 basis points in September to arrest a slump in the lira’s value. President Recep Tayyip Erdoğan had objected to the move.