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Battered by the Lira, Turkish Firms Face Catch-22 on Rates

  • Rate hike may calm lira, contain cost of dollar debt: Nomura
  • Local-currency borrowing costs have doubled since April
Erdogan Moves To Shore Up Alliances As U.S. Standoff Deepen
Photographer: Ismail Ferdous/Bloomberg
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An interest rate hike by Turkey’s central bank on Thursday might just be the lesser of two evils for the country’s beleaguered companies.

On the one hand, a steep rate increase could stem the slide in the lira that has boosted dollar-debt costs by more than 40 percent this year. On the other, pausing would spare the already bruised balance sheets of companies, which have had to contend with a near doubling in local borrowing costs.