© Bloomberg. A customer exchanges U.S. dollars at a currency exchange bureau inside the Grand Bazaar in Istanbul, Turkey, on Friday, Oct. 15, 2021. Turkish President Recep Tayyip Erdogan fired monetary policy makers wary of cutting interest rates further, driving the lira to record lows against the dollar with his midnight decree. Photographer: Moe Zoyari/Bloomberg
(Bloomberg) — Turkey’s lira headed for its longest streak of declines in a month as pressure mounted on the currency before the central bank’s interest-rate decision on Thursday.
The dropped for a seventh day, losing as much as 1.3% against the dollar and extending its slide this month to almost 9%, the worst among emerging markets. The currency was down 0.4% at 10.3547 per dollar as of 10:34 a.m. in Istanbul.
Economists predict the Turkish central bank will cut its benchmark rate by a further 100 basis points when it meets on Thursday, pushing the nation’s real yields deeper into negative territory. Policy makers cut the rate by 300 basis points to 16% in the past two months even as inflation quickened and central banks in developed nations move closer to tightening.
READ: Turkey Central Bank Survey Points at Another Rate Cut This Month
Turkey has been loosening its monetary policy in line with President Recep Tayyip Erdogan’s unorthodox belief that higher interest rates result in higher prices. A surging U.S. dollar has helped push the lira to record lows and the currency has closed below the psychologically important level of 10 per dollar every day this week.
Almost all emerging-market currencies edged lower against the greenback on Thursday. The lira has dropped the most among developing nations in 2021, losing almost a third of its value since the start of the year.
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