ISTANBUL: Turkey's lira firmed on Tuesday as investors hoped the central bank would ignore political pressure and increase interest rates to stem a slide in the currency at an emergency policy meeting later in the day.
The bank is expected to raise its overnight lending rate by 225 basis points to 10 percent at its first extraordinary monetary policy meeting since August 2011, at the height of the euro zone debt crisis, according to the median forecast in a Reuters poll of 31 economists.
The bank said it would issue a statement on the outcome of the meeting at midnight (2200 GMT) on Tuesday.
The lira firmed to 2.2680 against the dollar by 0743 GMT from 2.3120 late on Monday, having touched a record low of 2.3900 on Monday morning.
Prime Minister Tayyip Erdogan, keen to maintain economic growth ahead of an election cycle starting in two months, has been a vociferous opponent of higher borrowing costs, railing against what he describes as an 'interest rate lobby' of speculators seeking to stifle growth and undermine the economy.
"Stand firm, don't raise," the pro-government Yeni Safak newspaper said in its main front page headline on Tuesday, alongside a picture of Central Bank Governor Erdem Basci.
Heightened political uncertainty from a corruption probe swirling around the government as well as on concerns about the impact of a reduction in US monetary stimulus have sent the lira down more than 10 percent since mid-December.
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