Lira Extra Tightening Policy Discarded by Market: Turkey Credit
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The market is telling Turkey’s central bank that more must be done to shore up the lira, the world’s worst-performing currency in the past five weeks.
The lira fell as much as 1.7 percent today before the central bank unexpectedly intervened in the market. Central bank Governor Erdem Basci kept interest rates unchanged on Jan. 21 in favor of raising funding costs for lenders on “extra tightening days.” While banks will pay 9 percent for liquidity on these occasions, the currency recorded its ninth-straight daily drop and two-year note yields rose to 10.5 percent, the most after Brazil among 19 emerging-bond markets tracked by Bloomberg.