ISTANBUL: The Turkish lira was steady on Thursday, bolstered by the prospect of an interest rate hike next week and by easing concerns over the US central bank withdrawing its stimulus.
The lira hovered around 1.9150 to the dollar by 0826 GMT from 1.9136 on Wednesday, near its strongest in a month.
Federal Reserve chairman Ben Bernanke said on Wednesday the US central bank still expected to start scaling back its massive bond-buying programme this year, but left open the option of changing plans if the economic outlook shifted.
Bernanke's comments further boosted sentiment in markets after Turkey's central bank hinted on Monday it could raise interest rates next week to support the lira.
Concerns about the outlook for Fed policy and domestic unrest in Turkey have pressured the lira in recent weeks, helping push it to its weakest ever against the dollar at 1.9737 on July 8.
"The Fed chairman calmed the markets this time; we think this is a good strategy, as the global markets do know the asset purchases will slow down yet the timing is still vague, giving the markets time to adjust gradually," said Ayse Colak, executive vice president at Tera Brokers.
"The lira should stay strong for a while after these comments," she said.
Bernanke's remarks came after Turkish Central Bank Governor Erdem Basci said on Monday a "measured step" to widen the central bank's interest-rate corridor would be on the agenda at next Tuesday's monetary policy meeting.
The central bank has sold $6.45 billion this year at forex auctions, stepping up sales in recent weeks to try to support the local currency, but cannot sustain such action indefinitely.
Basci's signal suggests the bank is ready to try to stabilise the market by raising its overnight lending rate, which would increase the real interest rate on lira assets and make them more attractive to foreign investors.
The main Istanbul share index rose 0.17 percent to 77,205.25 points while the 10-year bond yield fell to 8.75 percent from 8.78 percent.
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