Weak lira adds nearly $4 bln to Turkish natural gas bill -minister

Weak lira adds nearly $4 bln to Turkish natural gas bill -minister

Turkey’s lira plummeted by 1% to a fresh low of 2.8943 per dollar and to an new all-time low of 3.2042 per euro after the central bank held rates steady and unveiled a vaguely stated plan to shift to an orthodox monetary stance.

The central bank indicated in a meeting with economists Wednesday that it won’t raise interest rates before the Fed does, Halk Yatirim economist Banu Kivci Tokali said after attending the briefing with central bank officials in Ankara.

Turkish equities and country-specific exchange traded fund are among the worst performers among developing economies, and the market continued to sink lower Tuesday after the central bank failed to instill confidence in investors.

The bank decided to implement a tighter liquidity policy “as long as deemed necessary”, it said in a statement accompanying its rates decision.

The lira, was at 2.9110 to the dollar at 1044 GMT, after earlier touching 2.9125, a new record.

In a statement, the central bank said a backdrop of falling food and energy prices, plus domestic and global market uncertainty were factored in its decision.

“There remains underlying political pressure against a rate hike and the latest inflation data showing weaker core inflation bought the bank some breathing space”, said William Jackson of Capital Economics in London.

“The idea that they can start loosening monetary policy, which is what their economy needs in terms of growth, is very unlikely given the challenges that their currency faces and what that brings in terms of inflationary pressure and currency weakness”, Gutteridge added later.

The overnight lending rate – the rate which determines the cost of overnight loans to banks – is expected at 10.75 percent and the overnight borrowing rate at 7.25 percent.



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