Turkish bond yields near the highest in two years once inflation is accounted for are proving insufficient to lure traders seeing the need for further rate increases to shore up the weakening currency.
Turkey’s currency and stocks erased losses, with the lira set for a 10-day high versus the dollar, as Finance Minister Mehmet Simsek ruled out capital controls and Russia’s central bank intervened to support the ruble.
Turkey’s prime minister said he’ll give the central bank’s emergency interest-rate increase time to succeed in halting a market slump, before trying alternative measures that he said are ready to be deployed.
Economists are split on whether Turkish monetary policy is looser or tighter after central bank Governor Erdem Basci cut one of his three interest rates while saying he’d use an experimental tool to manage liquidity.
Latvia’s economy expanded on an annual basis for the first time since the Baltic state was engulfed by the global financial crisis more than two years ago as the European Union’s toughest austerity measures pay off.
When Turkish Central Bank Governor Durmus Yilmaz drove interest rates to a historic low last November, economists said he might keep them there for half a year. Seven months later, there’s no sign he plans to budge from the current 7 percent.
Turkish central bank Governor Erdem Basci’s unexpectedly hawkish turn yesterday sent government note yields up by the most in almost two weeks even as he cut the benchmark interest rate for the first time in 16 months.