The Turkish lira rose on Friday, a day after the central bank raised the benchmark interest rate by 625 basis points in the biggest increase of its kind in the 15-year rule of President Recep Tayyip Erdogan. The key rates are now at their highest level since 2004, almost a year after Erdogan’s first term in office.
The central bank’s interest rate hike on Thursday meant the bank had raised interest rates by 11.25 percentage points since late April in a bid to bolster the troubled lira, easing investor fears about Erdogan’s influence on monetary policy.
The lira, which lost more than 40 percent of its value this year, rose to 6.08 against the US dollar after Thursday’s rate hike and hit 6.03 to the dollar at 0447 GMT.
The bank’s decision came hours after Erdogan attacked the policy of raising interest rates and blamed Turkish inflation on the wrong central bank’s moves.
The lira was driven by fears about Erdogan’s influence on monetary policy. Recently, there has been a sharp row with the United States, where NATO allies have seen mutual trade restrictions and sanctions.
Erdogan and his government threw the lira crisis as an “economic war” against Turkey and repeatedly urged the Turks to sell their foreign currency savings to support the lira.
On Thursday, Erdogan once again said the currency was “artificial” and vowed that his country would emerge stronger from the coming period.
The central bank and the government took a series of measures to support the troubled currency, with Erdogan issuing a ruling early on Thursday that the sale and lease of real estate should be conducted in pounds, putting an end to these transactions in foreign currency.
