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The value of the Turkish lira on Thursday was slightly better than expected after the central bank's announcement of a 425 basis point cut.
The central bank reduced interest rates from 24 to 19.75% on the repo for a week.
This decision was taken after a meeting of the Monetary Policy Committee of Central Turkey on Thursday, chaired by Bank President Murad Oisal. The Anatolian news agency reported.
Economists expected an average cut of 250 basis points, or 2.5 percentage points, according to a Reuters poll last week, which revealed a wide range of views.
In a statement, the bank said the committee had decided to reduce the benchmark rate of 425 basis points repo for one week to 19.75%, against 24% previously.
He pointed out that recent statements in Turkey show a moderate recovery in economic activity. He underlined the support given to the evolution of domestic demand and the effects of the monetary policy focus on the lowering of the inflation rate in the country.
According to the statement, the Turkish Central Bank will continue to use all the instruments at its disposal to stabilize prices and financial stability. As expected by the Central Bank of Turkey, the continuous improvement of the current account balance.
The lira experienced volatility earlier this year after falling nearly 30% against the dollar in 2018. The currency has stabilized in recent weeks despite Turkey's threat of imposing sanctions. from the United States for its purchase of Russian missile systems.
** The Turkish lira has improved
"We will see a rebound in the pound sterling price for the coming period, and it should reach about 6 lire against the dollar in the coming days, in order to stabilize at this price until the end of this year because no action is taken to keep the foreign exchange market on a path of stability,.
In the near future, the markets and the Turkish currency will naturally react because of the withdrawal of funds from banks to the banks where they were invested due to the rise in the interest rate for precious metals and currencies, before the situation become clearer and used in the productive sectors and levers of investment in services. .
The Turkish badyst adds that the policy of reducing interest rates is a demand of the Turkish government and President Erdogan himself, which motivated the dismissal of former governor Murat Cetin Qaya.
Fluctuation in the exchange rate should be limited because the results of the summer tourism boom, which increased by 25%, exports by 19%, as well as the stimulus campaign aimed at increasing direct investment and increasing after the end of the year. adoption of exceptional laws on nationality, will support the exchange rate of the lira.
The $ 116 billion foreign exchange reserve will support the lira and stabilize its price around 6 lira to the dollar. According to the newspaper "New Arab".
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