Lira loses ground as Turkish central bank holds key rate steady

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Istanbul, Aug. 20, 2020 (dpa/NAN) The Turkish lira on Thursday lost nearly one per cent against the U.S. dollar following a Central Bank decision to keep its benchmark interest rate unchanged at 8.25 per cent.

The lira was trading at 7.351 versus the dollar, the
bank said.

The bank said in a statement that economic recovery, which started in May following gradual steps toward normalisation, was gaining pace.

“Market uncertainties still remain significant.

“We will use all available instruments for financial stability,’’ it said.

Analysts have been urging the bank to raise rates after the lira went into a freefall in August, hitting a historic low level of 7.4 against the greenback.

President Recep Erdogan is against higher interest rates, which is counter to the orthodox market theory about exchange rates.

He even replaced the central bank governor last year for not following his instructions to cut rates, thus casting serious doubts over the bank’s independence.

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