The Repercussions Of Ending Turkey’s Monetary Tightening Cycle The Repercussions Of Ending Turkey’s Monetary Tightening Cycle

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Interest Rates in Turkey

Feb 22 (Reuters) – The end of a series of interest rate hikes in Turkey may bring respite to the country’s main interest rate, lifting it from the record low as the monetary policy meeting approaches on Thursday. The repo rate has increased from 8.5% last May as part of the tightening cycle.

Economist Expectations

All 11 economists polled by Reuters are anticipating the conclusion of the tightening cycle by the Turkish central bank. This move comes amidst the lira’s persistent fall and aims to bring stability to the currency.

Impact of Interest Rates

While the surge in interest rates did not halt the decline of the lira, the transition to a more traditional monetary policy has resulted in positive ratings reviews and attracted some foreign investment.

Foreign Investment and Lira Rebound

Recovery of the lira is contingent on the influx of foreign investment. The termination of the tightening cycle is expected to ease pressure on the economy, potentially attracting more foreign asset managers due to the substantially higher interest rate compared to other widely traded free-floating currencies.

Market Conditions and Lira Stability

The current financial market environment favors the lira, particularly in the context of carry trade. Furthermore, the record surge in Turkey’s stock market is likely to boost confidence and encourage investment in the nation’s currency.

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USDTRY and Turkish stocks

(Jeremy Boulton is a Reuters market analyst. The views expressed are his own; editing by David Evans)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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