AVN 55.47 Decreased By ▼ -1.55 (-2.72%)
BOP 10.21 Increased By ▲ 0.08 (0.79%)
CHCC 129.20 Increased By ▲ 0.37 (0.29%)
DCL 9.10 Decreased By ▼ -0.22 (-2.36%)
DGKC 104.75 Decreased By ▼ -2.84 (-2.64%)
EFERT 67.05 Decreased By ▼ -0.45 (-0.67%)
EPCL 31.75 Decreased By ▼ -0.85 (-2.61%)
FCCL 21.15 Increased By ▲ 0.04 (0.19%)
FFL 13.15 Increased By ▲ 1.18 (9.86%)
HASCOL 13.64 Increased By ▲ 0.06 (0.44%)
HBL 129.74 Increased By ▲ 5.08 (4.08%)
HUBC 82.60 Increased By ▲ 1.20 (1.47%)
HUMNL 9.51 Decreased By ▼ -0.09 (-0.94%)
JSCL 15.68 Decreased By ▼ -0.17 (-1.07%)
KAPCO 24.35 Decreased By ▼ -0.40 (-1.62%)
KEL 3.60 Decreased By ▼ -0.11 (-2.96%)
LOTCHEM 12.96 Decreased By ▼ -0.24 (-1.82%)
MLCF 33.00 Decreased By ▼ -0.65 (-1.93%)
OGDC 113.55 Decreased By ▼ -0.95 (-0.83%)
PAEL 33.35 Increased By ▲ 0.60 (1.83%)
PIBTL 11.10 Decreased By ▼ -0.24 (-2.12%)
PIOC 80.06 Increased By ▲ 3.96 (5.2%)
POWER 8.74 Increased By ▲ 0.62 (7.64%)
PPL 99.30 Increased By ▲ 0.27 (0.27%)
PSO 183.52 Decreased By ▼ -0.48 (-0.26%)
SNGP 55.85 Decreased By ▼ -0.51 (-0.9%)
STPL 11.55 Increased By ▲ 0.34 (3.03%)
TRG 48.35 Decreased By ▼ -1.41 (-2.83%)
UNITY 12.57 Increased By ▲ 0.01 (0.08%)
WTL 0.97 Decreased By ▼ -0.04 (-3.96%)
BR100 4,097 Decreased By ▼ -40 (-0.95%)
BR30 20,920 Decreased By ▼ -239 (-1.13%)
KSE100 39,578 Decreased By ▼ -294 (-0.74%)
KSE30 17,158 Decreased By ▼ -163 (-0.94%)
COVID-19 TOTAL DAILY
CASES 280,461 432
DEATHS 5,999 15
Sindh 121,705 Cases
Punjab 93,336 Cases
Balochistan 11,777 Cases
Islamabad 15,095 Cases
KP 34,253 Cases
Markets

Turkish lira steady ahead of an expected sharp rate cut

ISTANBUL: The Turkish lira held steady on Thursday as investors waited to see how sharply the central bank would cut int

25 Jul 2019

ISTANBUL: The Turkish lira held steady on Thursday as investors waited to see how sharply the central bank would cut interest rates, after the government abruptly sacked the bank's chief in a push for easier policy and relief for Turkey's recession-hit economy.

At 0900 GMT, the lira stood at 5.7115 against the dollar, little changed from Wednesday's close of 5.7110.

The central bank's benchmark rate has been set at 24pc since September, which was in the depths of Turkey's currency crisis that last year knocked nearly 30pc off the value of the lira. The emerging market currency is down another 8pc this year.

A Reuters poll of 23 economists showed a median expectation of a 250-basis-point rate cut, with predictions ranging between cuts of 100 to 500 points in the one-week repo.

The central bank will announce its rate decision at 2 pm (1100 GMT).

The consumer price index fell to 15.72pc year-on-year in June, off a 15-year-high above 25pc in October, opening the door to begin easing Turkey's monetary policy for the first time in more than four years.

The currency crisis was halted in part by aggressive rate hikes last year, though the economy tipped into recession.

Concerns over the central bank's independence from political pressure helped set off last year's crisis, and its credibility has come under new scrutiny by investors after its governor was unexpectedly fired less than three weeks ago.

The bank's new governor, former deputy Murat Uysal, took the reins after Turkish President Tayyip Erdogan fired Murat Cetinkaya because as Erdogan said he failed to follow the government instructions on monetary policy.

In the rate-setting meeting, Uysal faces the challenge of protecting the lira while satisfying Erdogan, said Piotr Matys, an EM FX Strategist at Rabobank. He expects a "relatively modest" 200-point cut.

A significant rate cut "would reignite FX volatility at a time when Turkey still requires a stable lira to support the disinflation process, restore confidence amongst households and corporates and slow down the dollarization of the Turkish economy," Matys said in a note.

Turkey's capacity utilisation declined in July to 76.2pc though it remained above a nearly four-year low of 74pc in February.

Manufacturing confidence also fell towards a pessimistic area in July compared to a month earlier.

The main BIST 100 index as well as the banking index traded flat ahead of the central bank meeting.

Copyright Reuters, 2019