Turkey’s Policy Shift Ends Turbulent Week for Its Currency
- Central bank forces lenders to borrow from more expensive rate
- Currency gains on signs authorities are scaling back stimulus
A currency exchange office worker counts Turkish Lira banknotes in front of the electronic panel displaying currency exchange rates at an exchange office in Istanbul, on Aug. 6.
Photographer: Yasin Akgul/AFP via Getty Images
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Turkish authorities capped a tumultuous week in the financial markets by tightening monetary policy, helping to pull the lira back from a record low.
The central bank on Friday stopped funding local lenders from its one-week repurchase rate, forcing the banks to borrow from a more expensive overnight window. If sustained, the move will amount to a 150 basis-point interest rate hike.