Turkish lira climbs ahead of central bank rates decision

Turkey’s lira gained against the dollar on Thursday ahead of a key decision on interest rates by the central bank.

The lira rose by 0.3 percent to 7.6842 per dollar in late morning trading local time in Istanbul.

The Turkish lira has rallied from an all-time low after President Recep Tayyip Erdoğan sacked the governor of the central bank on Nov. 7 and replaced him with Naci Ağbal, a respected technocrat and former finance minister.

The central bank is expected to increase the benchmark interest rate to 15 percent from 10.25 percent at the monthly meeting of its Monetary Policy Committee, according to the median estimate of economists polled by Reuters and Bloomberg. An announcement is expected at 2 p.m. local time.

Expectations among investors for a substantial rate hike have strengthened after Erdoğan said last week that the central bank had his backing for the fight against inflation, which reached 11.9 percent in October. But Erdoğan said on Wednesday that high interest rates were costly and deterred investment and employment.

The lira hit its record low of 8.58 per dollar on Nov. 6, then gained by as much as 12 percent to the strongest level since late September.

The currency has also rallied after the resignation of Berat Albayrak, Erdoğan’s son-in-law, as treasury and finance minister on Nov. 8 and his replacement two days later by former deputy prime minister Lütfi Elvan.