Turkish Lira eases as Central Bank announces higher inflation forecast
The Turkish Lira, which approached the 2.4 threshold against the dollar on Jan. 27, eased to 2.27 early Jan. 28 while Central Bank Gov. Erdem Basci announced that inflation forecasts had been revised upwards hurriyet daily news reported.
During a press conference Jan. 28, Basci said the inflation forecast for 2014 had been revised from 5.3 to 6.6, admitting that the rise in the exchange rate and currency volatility would produce a higher inflation rate.
The Turkish Central Bank's announcement of an emergency Monetary Policy Committee meeting to be held later Jan. 28 had given some respite to the national currency, which has been in free fall against the dollar and the euro amid an ongoing political crisis.
"Our goal during the Monetary Policy Committee meeting this afternoon will be to undertake steps that will ensure price stability," Basci said.
The Central Bank has so far refrained from raising interest rates to defend the lira amid government concerns that any rise in rates could jeopardize its growth targets.
It intervened heavily in the foreign exchange market to support the lira last week, plowing at least $2 billion into the foreign exchange market in an unsuccessful attempt to prop up the lira.
The Jan. 28 meeting is expected to be crucial for the lira's course in the near future.