ISTANBUL: Turkey's lira hit its strongest level since August on Friday and cemented its position as the top-performing currency in the world this year, after the central bank governor told Reuters that interest rates were unlikely to be cut for a "long time".
In his first interview since taking the job in early November, Naci Agbal said "It does not seem possible to put interest rate cuts on the agenda for a long time this year," adding that they could also be raised again if necessary. The comments boosted the lira by more than 0.7% to 7.09 against the dollar from 7.14 late on Thursday. That extended its gain against the dollar for 2021 to nearly 5%, albeit after an unbroken eight-year slide.
"The recovery narrative in Turkish assets has been strengthened by the governor's remarks," said Societe Generale emerging market strategist Phoenix Kalen.
She said Agbal's comments reaffirmed that the central bank, which in recent years has often bowed to political pressure to cut interest rates, now wanted to keep them high to get inflation under control.
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