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Lira Rises as Turkey Yield Appeal Absorbs Shock of Rate Cut

  • Repo rate lowered 425bps; the estimate was for a 250bp cut
  • Lira advances after leading gains and falling 1.1% earlier
Updated on

Within 10 minutes of Turkey’s central bank decision, the lira reversed losses and advanced the most in emerging markets as traders coped with a record interest-rate cut by focusing on the currency’s yield appeal.

It rose as much as 0.9%, erasing an earlier knee-jerk reaction that sent it down more than 1% after the repo rate was lowered by 425 basis points, overshooting the median estimate in a Bloomberg survey of economists by 175-basis-points. The currency later gave back some of the gains, following a downturn in emerging-market currencies.