Lira tumbles to record low
The Turkish lira fell to a record low after the central bank cut its key interest rate for a second straight meeting despite the deteriorating inflation outlook.
The lira slumped more than 2% to 9.4867 per US dollar. The Turkish central bank reduced the one-week repo rate by 200 bps to 16%. The median estimate in a Bloomberg survey was for a 100 bps cut.
It comes after President Recep Tayyip Erdogan fired three senior policymakers who disagreed with his calls to continue lowering borrowing costs last week (ended 15 October), allowing him to exert greater influence on the bank.
The move puts the central bank’s one-week repo rate around 400 bps below inflation, eroding the appeal of holding the currency and leaving it exposed to shifts in global risk sentiment.
Inflation accelerated to just shy of 20% in September – four times the official target.
The Borsa Istanbul Banks Index extended its slide to 2.6%. – Bloomberg News.
On Thursday (21 October), the US Dollar Index rose 0.23% to 93.770, the euro fell 0.24% to USD1.1623, the pound lost 0.22% to USD1.3793, and the yen strengthened 0.28% to 113.99 per dollar.
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