Turkish Lira Jumped After The Central Bank Chief Ruled Out a Rate Cut

The Turkish lira reached its strongest level since August, Friday, February 5, and strengthened its position as the best performing currency in the world since the beginning of the year, after the central bank governor told Reuters that it was unlikely to cut interest rates for a “long period”.

In his first interview since taking office in early November, Naji Iqbal said, “It does not seem possible to put interest rate cuts on the agenda for much of this year,” adding that interest rates may be raised again if necessary.

His comments boosted the lira, rising more than 0.7% to 7.09 against the dollar, from 7.14 late Thursday. This extended its gains against the dollar since the beginning of 2021 to about 5%, after its continuous decline over eight years.

Under Iqbal’s administration, the central bank raised interest rates to 17% from 10.25%, making Turkey follow the tightest monetary policy in any large advanced or emerging market economy.