ANKARA: Turkish lira gained against the dollar and stocks were stronger on Wednesday as markets took their cue from rising emerging market currencies, shrugging off the negative shock of a central bank decision to leave interest rates unchanged a day ago.
Analysts and investors have repeatedly called for a rate hike to rein in inflation and put a floor under the lira , which has been hit political risk driven by violence in Turkey's mainly Kurdish southeast and by a rumbling dispute with Russia over a downed warplane.
But the bank (CBRT) held fire for the 10th straight month, despite a widely expected rate hike move and even though annual inflation rose to 8.1 percent in November, well above an official 5 percent target.
The central bank is holding a meeting with economists on Wednesday in the capital Ankara, and markets are following the messages coming out of that meeting closely.
"We expect to hear more details on future policy from the CBRT's meeting with economists today in Ankara," said Ozlem Derici, chief economist at Istanbul-based Deniz Invest.
"We think that interest rates will continue to be pressured by ongoing global volatility, sizable government bond auctions in January and February as well as high inflation over the next couple of months, unless the CBRT can provide a credible explanation for this," she added.
President Tayyip Erdogan has repeatedly called for lower interest rates to boost economic growth, fuelling fears of political interference in central bank policy.
The lira traded at 2.9268 against the dollar at 1015 GMT, from 2.9371 late on Tuesday, partially gaining it losses of almost 1 percent versus the greenback following the rate decision.
The main Istanbul bourse share index rose 1.44 percent to 74,153 points, having fallen 0.29 percent on Tuesday.
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