Turkey's Central Bank to cut rates to support lira

ANKARA

The Turkish Central Bank announced that it will discuss an interest rate cut on one-week foreign-exchange deposits on April 22 after the Turkish lira dipped to a new low against the U.S. dollar on Tuesday.

In a statement on its website the bank said the Bank’s Monetary Policy Committee will also discuss a measured hike in the partial remuneration rate on Turkish lira reserve requirements.

“The agenda of the Monetary Policy Committee of April 22, 2015 will include a measured cut in the FX depo lending rates, a measured hike in the partial remuneration rate on Turkish lira reserve requirements. In the meeting, other measures to support stability in financial markets will also be considered if deemed necessary,” the bank said.

The bank stepped in to support the lira after it fell to record lows against the U.S. dollar amid concerns over a potentially early interest rate hike in the U.S..

Separately, on March 9, the Central Bank cut the one-week deposit rate for dollars from 7.5 percent to 4.5 percent, in line with global interest rate developments. It also cut its one-week euro deposit rate from 6.5 percent to 2.5 percent. 

The Turkish lira dipped to a new low against the greenback on Tuesday as the U.S. dollar index rose to an historic high.

Starting the day at 2.6684, the Turkish lira slumped to 2.6737 in early morning trade.

Experts believe that the dollar's strength was the major driver behind the decline in the Turkish lira, as well as other currencies, as certain statistical evidence point to a large-scale dollar demand across the world.