Turkish Central Bank to Announce Rate Decision at Midnight

The Turkish lira rebounded strongly after the central bank said it would schedule an extraordinary policy meeting on Tuesday to evaluate recent developments and take necessary measures to ensure price stability.

The central bank said the decision would be published midnight local time on Tuesday. The news appeared to be interpreted as a signal that Ankara would raise interest rates aggressively, sending the lira 2.3% higher against the U.S. dollar by late New York trading. One dollar bought 2.2832 liras late Monday, down from 2.3367 liras late Friday.

Analysts said the failure to deliver a significant increase in interest rates could spark a broad selloff. “They have to hike…and aggressively,” said Tim Ash, emerging-markets economist at Standard Bank in London.

Mounting expectations that the U.S. Federal Reserve will begin scaling back its bond purchases at a faster clip has hit developing economies, which for years have been buoyed by the high tide of cash generated by the Fed’s stimulus program. The pressure has weighed heavily on the currencies of Turkey and South Africa, and spread to developing nations such as Argentina, which faces rising inflation and social unrest, as well as Russia and Mexico.

via WSJ.com

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza