Turkey's Lira Needs More Than Intent to Raise Interest Rates
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There Is Risk Turkish Central Bank Might Under-Deliver, Malik Says
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The Turkish lira may have found its footing after the central bank signaled higher interest rates were around the corner, but some investors worry that any lasting relief will require a bold hike that it is loath to deliver.
Even after 700 basis points of monetary tightening since December, consumer-price growth has accelerated for five months, narrowing the inflation-adjusted policy rate to around 1 percent. Just to drive that back toward levels that afforded the lira some relative stability in June, the central bank would have to raise borrowing costs by another 400 basis points.
