Turkey’s Central Bank on Jan. 24 increased the upper limit of its interest rate corridor to 9.25 percent from 8.5, a move that proved fruitless on the ailing Turkish Lira.
The Central Bank’s Monetary Policy Committee (PPK) kept its one-week repurchasing rate unchanged at 8 percent while the overnight borrowing rate was kept at 7.25 percent.
But with markets hoping for even more and taken aback by the absence of any move in the repurchasing rate, the lira initially lost 1.95 percent in value against the U.S. dollar after the announcement.
It later stabilized to trade at 3.77 against the greenback, marking a 0.5 percent loss in value.
Some economists expected interest rates to be increased by 100 basis points - or a full percentage point - after the lira lost seven percent of its value against the dollar in the first four weeks of 2017 alone.
The lira lost a quarter of its value against the dollar over the last year.
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Central Bank’s rate decision has limited effect on Turkish lira - FINANCE