Higher rates not helping Turkish lira as it slides towards new record lows

By bne IntelliNews November 25, 2016

The Turkish lira hit to a new historic low of 3.4768 against the US dollar in early trading hours of November 25, a day after the central bank decided to raise its policy rates for the first in nearly three years.

The bank was hoping the move will support the battered currency but the breather was only short-lived and the lira's advance faded away within hours of the decision to boost borrowing costs. Additionally, EU parliament voted overwelmingly on a resolution calling for the end of accession talks with Turkey in response to Ankara's post-coup crackdown on dissent.

The lira was trading at 3.4456 against the dollar as of 19:03 Istanbul time on November 25, up 0.02% d/d. Turkish stocks were up by 0.23% on the day.

Worsening economic outlook following the July 15 coup attempt, along with domestic political risks, as well as tension with European Union and FED’s expected rate hike in December are weighing heavily on confidence taking their toll on the nation's currency. Meanwhile, security threats never deescalate in the country over Syria and Iraq policies as well as Kurdish policy.

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