- USD / TRY is up almost 2% and records all-time highs above 7.97.
- The central bank of Turkey (CBRT) kept interest rates unchanged.
The Turkish lira tumbled after Turkey’s central bank kept the interest rate unchanged, which led USD / TRY to rise from 7,800 to 7,978, marking a new record high.
The The Turkish pound was rising on Thursday, but the CBRT’s decision to hold interest rates against expectations of a further rise triggered a sharp decline. The central bank kept the one-week repo rate unchanged at 10.25%, the overnight loan rate at 8.75% and the overnight loan rate at 11.75%. The expectation was for an increase of at least one hundred basis points in the benchmark rates.
He central bank remains reluctant to raise key interest rates. Long ago, refusal to cut rates was the main reason behind the firing of former CBRT Governor M. Cetinnkaya.
Another negative factor for the lira is the geopolitical situation with the focus on the direct conflict with Greece and the likely involvement in the current Armenia-Azerbaijan dispute.
The lira thus erased its recent surge, particularly after Turkey announced on Wednesday a gas discovery in its Sakarya field off the Black Sea coast.
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Credits: Forex Street
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