Lira getting Stronger - Why?

[Kevin Sowten]

"In an extraordinary Monetary Policy Committee meeting late on May 23, the Central Bank increased the late liquidity window lending rate to 16.5 percent from 13.5 percent."

[JohnF]

That they did. I but I reckon they checked out this topic just to make sure they were doing the right thing  

JF

[Scunner]

Experience shows these are all short term fixes. It’s worth bearing in mind that if and when the rate soars off again, the ‘wee fella’ will consider that to be proof that he was correct - that raising interest rates isn’t the solution.

[JohnF]

If he'd simply leave it all to Simsek he'd have it sorted in six months.

JF

[Scunner]

Do you think he might?

[JohnF]

Well, he's not running in the election and some are suggesting that it's because he'll be joining the cabinet if the wee fella gets back in - elected members have to resign now to join cabinet. So who knows, he's got the skills if left alone.

JF

[stoop]

6.09 now

[Scunner]

That’s nothing - a 3% interest rate hike hasn’t brought the exchange rate down to what it was last September, or 6 weeks ago, it has only brought it down to the rate it was the day before yesterday..:

[JohnF]

Yes, you're right.  Too little, too late comes to mind.

Its falling again this morning, against all major currencies.  I hate to agree with the wee fella, but I reckon some currency traders smell blood and may see opportunities to make a lot of money off a weakening lira.  However, they're not doing it because its Turkey, they're doing simply to make money. 

Just going back to Şimşek for a sec, he's always struck me as being a smart guy working within a government that very often doesn't let the smart guys do what they do best. Unfortunately, the markets are all spooked by the possibility of the wee fella being more hands on, they know he's a bit of a nugget when it comes to the economy.  So it doesn't matter who ends up in charge of finance and the economy in the cabinet, it looks like he'll always have the final say.  Not good.

Here's hoping we don't end up back where we started in a day or so, although there are some casual visitors to Turkey who will no doubt be rubbing their hands at all the extra liras to their pounds.

JF
 

[yabanci]

Experience shows these are all short term fixes.

Seems so. The banks were giving 6.05 tl to the  £ on Tuesday morning. Today following the late liqiuidity rate hike, it was giving 6.20 tl to the £.