ISTANBUL: The Turkish lira weakened against the dollar on Wednesday as the US currency gained globally, and as investors took a cautious tack ahead of a Turkish central bank policy meeting expected to see interest rates left on hold.
Shares also weakened, with carmaker Ford Otosan dropping 1.2 percent after it said production was halted at two plants due to supply problems caused by a widening labour dispute in the sector.
All 19 economists in a Reuters poll expect the central bank (CBRT) to keep rates steady at its last meeting ahead of a June 7 parliamentary election, holding fire against a background of flagging growth and a volatile lira which has fuelled inflation.
"Though the expected pickup in inflation may point to further tightening, the CBRT is likely to refrain from doing so ahead of the elections," Deniz Invest said in a note.
"The other rationales that would keep the CBRT from changing rates are alleviated pressure over exchange rates coupled with no further deterioration in inflation expectations."
Ahead of the bank's 1100 GMT announcement, the lira weakened to 2.6060 against the dollar, easing half a percent on the day. The Turkish market was closed on Tuesday for a public holiday.
Despite gaining 4 percent against the dollar last week, its biggest weekly gain for 3-1/2 years, the lira is still down around 10 percent against the U.S. currency this year.
The main BIST 100 share index fell 1.06 percent to 87,708.93 points.
The benchmark 10-year government bond yield rose to 9.17 percent from 9.02 percent on Monday.
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