The Turkish Central Bank may announce a hike of key interest rate from the current 8.5% to as high as 40% this week as a measure to support the depreciating national currency and attract investments, media reported on Tuesday
ANKARA (Pakistan Point News / Sputnik - 20th June, 2023) The Turkish Central Bank may announce a hike of key interest rate from the current 8.5% to as high as 40% this week as a measure to support the depreciating national currency and attract investments, media reported on Tuesday.
Transactions are currently being carried out with the expectation that Turkey's central bank will increase the interest rate, with some analysts believing that it may be raised to 15-20% this week and an additional 5 percentage points at the next two meetings, and others expecting a one-time hike to 30-40% instead, Turkish newspaper Milliyet reported.
This move will be aimed at attracting more foreign investments in the country so that investors have no concerns about the Turkish lira and a further developments in the financial sector in Turkey, the newspaper said.
The depreciation of the Turkish lira against foreign currencies has continued since the beginning of the week. The US dollar-lira rate reached a new high of 23.63 lira per dollar Tuesday. The dollar, which cost 18.73 lira at the beginning of the year, rose to 19.6 lira before the first round of the presidential election on May 14 and only accelerated after it.
The Turkish Central Bank has kept a relative low interest rate despite the lira's decline, decreasing it from 19% in early 2021 to 8.5% last February and keeping it at that level ever since. Turkish President Tayyip Erdogan vowed during his campaign that interest rates will be declining as long as he is in power. Many commentators, however, have said that the interest rate might be increased following the recent appointment of Hafize Gaye Erkan as the bank's new governor to strengthen the national currency.
