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Turkey Rate Increase Fails to Stop Bleeding

Lira recovered only temporarily after Turkey's central bank doubled interest rates.

By Onur Ant, Bloomberg, Taylan Bilgic, Bloomberg, Selcuk Gokoluk, Bloomberg | Updated on January 29, 2014

The lira reversed earlier gains after a doubling of interest rates failed to assuage concern that Turkey’s economy will be left exposed by a slowdown in China and a reduction in U.S. monetary stimulus. Stocks fell.

Turkey’s central bank raised all its main interest rates at an emergency late-night meeting in an effort to shore up the lira, resisting government pressure and reversing years of policy aimed at stoking growth.The Ankara-based bank increased the one-week repo rate to 10 percent from 4.5 percent, the overnight lending rate to 12 percent from 7.75 percent, and the overnight borrowing rate to 8 percent from 3.5 percent.

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