ISTANBUL: The Turkish lira tumbled to a record low against the dollar on Thursday on expectations that the central bank will cut interest rates at an extraordinary monetary policy committee meeting as early as next Wednesday.
In a Reuters poll, all 15 economists who responded said they expected the bank to hold an unscheduled meeting after inflation data are released on Feb. 3. They expect it to cut its main interest rate by 50-75 basis points.
The Federal Reserve's upbeat view on the U.S. economy and signal that it was on track to raise interest rates this year also hit the lira, which slipped as far as 2.4188 from 2.3780 late on Wednesday. It edged back to 2.4068 by 1307 GMT on Thursday.
"With many investors taking the view that the Fed is firmly on course to begin hiking rates in the middle of this year, one would expect the lira to be under pressure. But its recent slide has as much, if not more, to do with the perceived politicisation of monetary policy in Turkey," said Nicholas Spiro of Spiro Sovereign Strategy in London.
"The more (central bank governor Erdem) Basci hints at further rate cuts, the stronger the perception that his hand is being forced by the government, particularly when (the bank) has gone so far as to arrange an unscheduled meeting to consider trimming rates further," he added.
The main share index fell 1.23 percent to 89,232.29 points, slightly outperforming the emerging market index which fell 1.4 percent.
The benchmark 10-year government bond yield rose to 7.07 percent from 6.99 percent on Wednesday.
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