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What’s the matter with the Turkish Lira?

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The Turkish Central Bank surprised markets this week with a 125-basis point (bp) rate hike. The Bank had already hiked the rate 300-bp two weeks ago. Can this move now sustainably boost the value of the Turkish Lira against the dollar? I don’t think so.

First of all, the Bank’s surprise move is not considered a sign of its determination to fight rising inflation. It simply looks like a political move to stabilize the lira ahead of the snap elections two weeks from now. The rapid depreciation of the lira has always been considered a prime sign of economic crisis in Turkey. Without it, we would have been going into the first election without a sense of exchange rate stability. That is not good for any incumbent, least........

© Hürriyet Daily News