Central Bank Does Not Increase Interest Rate; Market Reacts Negatively

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The Monetary Policy Committee of the Central Bank of the Republic of Turkey (TCMB) held his monthly meeting for July today (July 24).

The Central Bank has announced that it has kept the one-week repo rate (political interest rate) fixed at 17.75 percent.

The Committee has stated, "While the foreign demand has maintained its strength, there are signals pointing to a slowdown in domestic demand."

Economists expected interest rate hike

While a survey conducted by Bloomberg HT previously showed that economists expected that the interest rates would be raised by 100 basis points, Dünya newspaper announced that economists foresaw an interest rate hike of 100-125 basis points.

According to the expectation survey conducted by the state-run Anadolu Agency Finance with the participation of 18 economists, all of the economists, except for one, expected that the interest rates would be raised.

Expectation of interest rate hike held the foreign exchange rates in check

Since it was expected that interest rates would be increased in the meeting of the Monetary Policy Committee of the Central Bank, the exchange rates of the US Dollar and Euro were at the lowest levels of the last two weeks.

While the exchange rate of the US Dollar was 4.74 Turkish Lira yesterday (July 23), the exchange rate of Euro was 5.55 Turkish Lira.

Turkish Lira has decreased in value against US Dollar

After the Central Bank has announced that there will be no increase in the political interest rate, the Turkish Lira has decreased in value against the US Dollar by 3 percent. The exchange rate of dollar has reached 4.94 TRY.

As for Euro, its exchange rate has increased from 5.55 to 5.75 Turkish Lira. The Stock Market has also dropped by more than 2 percent. (HK/SD)