The lira advanced to a one-month high after Turkey’s central bank left interest rates unchanged, saying high food prices are delaying an expected drop in inflation. The benchmark equity index rose.
The currency strengthened 0.3 percent to 2.2386 against dollar at 6:01 p.m. in Istanbul, the strongest since Sept. 24. Yields on two-year notes rose five basis points to 8.75 percent. The Borsa Istanbul 100 Index of stocks climbed 1.8 percent, increasing for a fifth day.
The central bank left the one-week repurchase rate at 8.25 percent today, in line with the median estimate in a Bloomberg survey of analysts. The bank will keep its monetary policy “tight” until there’s a significant improvement in inflation, which remains well above the 5 percent year-end target, it said in a statement accompanying the decision.
“It would have been eccentric to cut rates when the central bank tightened liquidity so recently,” Batur Asmazoglu, a money manager at Invest AZ Menkul Degerler AS in Istanbul, wrote in e-mailed comments. “They did this to slow the lira’s depreciation,” he said before the central bank announcement.
Inflation was 8.9 percent last month. Policy makers maintained overnight lending and borrowing rates as expected by the analysts, after cutting the main one-week repo rate by 175 basis points in the three months from May.