ISTANBUL: Turkey's lira weakened marginally on Wednesday as investors considered whether the central bank had reached an end to its backdoor tightening steps after the cost of funding remained unchanged from a day earlier.
The lira stood at 7.3790 against the dollar at 0917 GMT, compared with a close of 7.3750 on Tuesday. The currency has lost some 19% of its value against the dollar this year. As the lira hit record lows last month, the central bank began tightening policy through backdoor steps, such as funding the market higher than the policy rate which stands at 8.25%, in an attempt to support it.
As a result of the tightening steps, the weighted average cots of funding rose gradually over the past four weeks to stand at 10.15% on Tuesday, from a low of 7.34% on July 16.
The rate was unchanged on Wednesday, after the rate on traditional repo auctions declined towards 10% in recent days, leading analysts to question whether the central bank had stopped its tightening steps. The interest rate on the repo auction was 10.10% on Wednesday, compared with 11.41% on Aug. 24.-Reuters
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