Lira Bears in Retreat After Turkey’s Supersized Rate Hikes
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Turkey’s shift to more conventional economic policies, supported by the central bank’s jumbo interest-rate hike last month, has sent the cost of hedging against lira depreciation to a two-year low. The extra cost to protect against lira weakness in the coming month — compared with hedging against gains — dropped to 4.05 percentage points on Tuesday, the lowest since October 2021. Turkish President Recep Tayyip Erdogan overhauled his economy team following an election in May, naming former Wall Street bankers Mehmet Simsek and Hafize Gaye Erkan as head of treasury and central bank governor, respectively.