Once confidence in a currency is lost, it’s hard to get it back. Turkish central bankers are trying hard to hold the public’s confidence in the lira by hiking interest rates to 24%. At The Wall Street Journal, David Gauthier-Villars explains the central bankers’ efforts to maintain control. He writes:
The monetary-policy decision could help ease investor concerns over the central bank’s independence from Turkey’s President Recep Tayyip Erdogan, whose call for lower rates earlier Thursday had weighed heavily on the lira.
“This was much bigger than expected. It sends a signal to the market and it’s a good signal,” said Kevin Daly, portfolio manager for emerging-market debt at Aberdeen Standard Investments. “It gives you some confidence in the lira that you might be able to buy this thing again.”
The central bank has been under heavy pressure from international investors to raise rates to tame spiraling inflation and stabilize the lira, which has lost about 40% against the dollar this year amid growing investor concerns over the ability of Turkish corporation’s ability to repay hefty foreign currency debt.
Read more here.
Originally posted on Yoursurvivalguy.com.
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