ISTANBUL: The Turkish lira firmed as much as 2% against the dollar on Monday to its strongest level since early September, building on gains after last week's central bank rate hike and supported by institutional buying ahead of a tax payment deadline.
The lira rose as high as 7.4100 against the US currency in thin trade due to end-of-year holidays. Last Thursday, the central bank raised its one-week repo rate to 17% from 15%.
At 1209 GMT, the lira stood at 7.4425, still 20% weaker than at the end of last year.
"There is no big news flow. But because it is the last day for tax payments we see some lira demand on the institutional side," said one Istanbul-based trader.
Another trader also said there was a move into the lira on the institutional side, with foreigners largely absent from the market due to the holidays.
"The expectation for the first months of next year is inflows becoming clearer due to the impact of the new steps of the Turkish Central Bank and economic leadership," the trader said.
The bank raised its key rate by 200 points last week as it sought to cool double-digit inflation and bolster its policy credibility under new governor Naci Agbal.
The tightening followed a 475-point hike last month, which was Agbal's first move after taking the reins in a surprise leadership overhaul in which Turkish President Tayyip Erdogan pledged a new market-friendly economic era.
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