Turkish lira steady ahead of interest rate decision

Turkey’s lira was little changed ahead of a central bank decision on interest rates on Thursday, a day after the currency hit a two-week high when U.S. President Donald Trump announced the lifting of sanctions on Ankara.

The currency came under pressure in recent weeks as Ankara began a cross-border military operation in northeastern Syria targeting the Kurdish YPG militia, a former ally of the United States in the fight against Islamic State.

It has since recovered those losses, hitting its highest level on Wednesday since before the operation, after Washington lifted the sanctions it had imposed to persuade Ankara to stop the incursion.

The lira stood at 5.7370 against the dollar at 0755 GMT, little changed from a close of 5.7350 on Wednesday, when it had firmed as far as 5.7250.

Turkey has agreed with Moscow and Washington separately to remove YPG fighters along its border, reducing the possibility of another offensive against the militia.

The easing of pressure on the lira has boosted expectations of a rate cut on Thursday. The central bank has already slashed its policy rate by 750 basis points since July to support the economy as it struggles to emerge from a recession.

The median estimate in a Reuters poll of 20 economists showed the bank is expected cut its policy rate by 100 basis points to 15.5%.

“We would have expected the CBRT not to cut interest rates this month if we (Turkey) did not agree on the ceasefire with the U.S.,” said Oyak Securities in a note, “but our expectation is also that the CBRT will make a 100 basis point reduction in its meeting this week.”

The main share index was up 1.23%, while the banking index was up 1.47%. (Reporting by Ali Kucukgocmen Editing by Gareth Jones)

Source from: The Peninsula