The Turkish Lira Decline Ahead of an Important Decision

The Turkish lira weakened slightly Thursday, March 18, ahead of a central bank decision on interest, when it is expected to raise the main interest rate by 100 basis points to 18%, in what is considered an important test of its commitment to reduce inflation.

Expectations for a rate hike increased this month after the lira lost up to 10% since mid-February, as yields on US Treasury bonds increased. Inflation also rose more than expected, to nearly 16% last month.

The lira settled at 7.4930 against the dollar, weakening slightly from Wednesday’s close at 7.4860.