Turkish lira remains stable after rising rates, investors turn to government plan

ANKARA (Reuters) – The Turkish lira has fallen on Friday, as investors weigh the impact of Thursday's sharp 625-point rate hike and plan for a new economic plan to be unveiled next week.

The central bank on Thursday raised its benchmark rate to 24 percent amid the steepest rise in President Tayyip Erdogan's 15-year rule, reviving the TRYTOM = D3 book and perhaps alleviating investors' concerns about the bankruptcy. independence of the bank.

The TRYTOM = D3 pound lost more than 40% of its value this year due to investors' concerns about Erdogan's influence on monetary policy and continued conflict with the United States that resulted in reciprocal sanctions and trade restrictions.

On Friday, the reading was at 6.0342 for a dollar at 0728 GMT. Implicit volatility indices for the lira also fell to their lowest level in more than a month, as sentiment continued to improve.

The bank's decision came hours after Erdogan, himself "an enemy of interest rates," reiterated his opposition to high interest rates and blamed Turkey for its central bank.

With Thursday's rate hike, the bank has raised its interest rates by 11.25 percentage points since the end of April to try to support the distressed lira. The key rates are now at their highest level since 2004, about a year after Erdogan came to power.

Late on Thursday, Finance Minister Berat Albayrak told the pro-government Sabah newspaper that the central bank's decision had ended any discussion of the bank's independence and that Turkey would unveil its medium-term economic program. September 20th.

Albayrak, who is also Erdogan's son-in-law, said the three-year business plan would put forward "realistic macroeconomic targets" with "appropriate plans of action" for the problems of the economy.

Erdogan and his government described the crisis as "an economic war" against Turkey, repeatedly urging Turks to sell their foreign currency savings to support the reading.

In an attempt to support the currency, the central bank and the government have taken a series of measures in recent weeks. Erdogan said on Thursday that contracts for the sale and rental of properties must be in foreign currency. .

On Thursday, Erdogan again stated that the currency's volatility was "artificial" and promised that his country would emerge stronger from the coming period if the Turks were well-positioned against these attacks.