Turkey: Pound boost following central bank decision on unchanged interest rate

The Turkish pound strengthened more than 1% after today's decision of the central bank to leave interest rates unchanged.

The exchange rate of the Turkish currency, which was moving steadily or declining before the decision, temporarily rose 1,3% to 13,14 pounds per dollar from the level of 13,41 pounds, while recently trading at 13,29 pounds.

The Turkish central bank left the key interest rate unchanged at 14% and said it would prioritize the pound exchange rate. He also noted that he expects a deflationary process to begin after the recent measures taken to stabilize the currency.

"The fixed interest rate marks the beginning of a less aggressive monetary policy," said a foreign exchange market analyst at Monex Europe. "The addition of the phrase that the Turkish pound will be given priority shows in the markets that the central bank finally admits that it has an exchange rate target, which is welcome for Turkish assets," he added.

The pound plunged 44% in 2021 as a cut in its key interest rate by five percentage points amid rising inflation pushed the currency to a record low of 18 XNUMX per dollar.

On Thursday, Turkish stocks rose 0,6%, with the banking index climbing 1,1% to a month high.

Source: RES-EAP

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