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Turkey lira continues to fall to record low

Turkish Lira [Mohammed Elshamy/Anadolu Agency]
Turkish Lira, 20 September 2018 [Mohammed Elshamy/Anadolu Agency]

The Turkish lira yesterday fell to its lowest record against the US dollar as investors expected the central bank to adopt monetary tightening measures.

The lira dropped more than 0.25 per cent to 7.3880 compared to the dollar at from about 7.3650 on Friday.

Whilst expectations have risen regarding a formal increase in interest rates to reduce lira losses, the central bank has so far resorted to informal measures to raise funding costs, including liquidity policies and providing incentives for lenders to borrow at a higher rate.

On Thursday, the central bank will announce its interest rate decision for August. Some analysts are expecting an interest rate increase, while others predict that the central bank will maintain its policy of tightening through liquidity rather than a formal rate raise.

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