Lira falls after rates are left unchanged

Turkey’s central bank left is benchmark interest rate unchanged Tuesday, surprising investors and sending the lira falling.

The Monetary Policy Committee in Ankara left its benchmark one-week repo rate at 8%. The central bank increased the overnight lending rate to 9.25% from 8.5% and held overnight borrowing rate at 7.25%.

In addition, the central bank raised the late liquidity window overnight lending rate to 11% from 10%. This is the rate the national lender charges Turkish banks if they need to borrow just before local markets close.

Turkey’s lira extended earlier losses against the dollar to trade 1% lower at 3.8, having weakened to as low as 3.8289 following the decision. The main BIST 100 stock index was up 0.02%, while the benchmark two-year government bond yield dropped to 11.19% from 11.27% earlier Tuesday.


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