Turkish lira briefly hits record low in Asian trade

FILE PHOTO: Turkish lira banknotes are seen in this illustration taken January 6, 2020. REUTERS/Dado Ruvic

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SULAIMANI — The Turkish lira briefly touched a record low in early Asian trade on Monday (September 28) before steadying around the level at which it closed last week after the Turkish central bank unexpectedly raised key interest rates.

The bank hiked its policy rate by 200 basis points to 10.25% on Thursday, tightening policy for the first time in two years in order to support the currency and rein in inflation, according to Reuters.

The lira TRYTOM=D3 stood at 7.6750 against the dollar at 0420 GMT, having touched a record low of 7.80 - a decline of 24% from the end of last year. It closed at 7.6725 on Friday.

The currency has been among the worst performers this year on worries about Turkey’s depleted forex reserves and sharply negative real interest rates. It has lost half its value in less than three years.

Until last Thursday’s rate hike, the central bank had resorted to back-door methods to tighten policy, using liquidity measures and directing lenders to borrow at a higher rate.

(NRT Digital Media/Reuters)