Erdogan Scheduled To Attend South Africa BRICS Summit, Meet With Putin

Erdogan Scheduled To Attend South Africa BRICS Summit, Meet With Putin

Erdogan Scheduled To Attend South Africa BRICS Summit, Meet With Putin

Erdogan confirmed at multiple occasions his reluctance to higher interest rates, interpreted as a barrier to economic growth, a rather bad news for the lira, which already depreciated by 25.60% and 22.25% against Dollars and Euro since the beginning of the year. Erdogan pledged during the campaign to exercise greater control over monetary policy, sending the lira to fresh lows. The 64-year-old leader had repeatedly clashed with the central bank over borrowing costs that he's determined to keep as low as possible, though his rhetoric has backfired by triggering policy makers to raise rates to support the lira.

Since his appointment, Albayrak has sought to reassure markets and present himself as trustworthy on the economy, insisting the central bank's independent status would not be "a subject of speculation".

Jason Tuvey, senior emerging markets economist at Capital Economics, said the central bank decision showed Erdogan is "already using his strengthened position to influence monetary policy". It's now trading down 3.38% at 4.8983 per dollar, and is threatening its record low of 4.9743.

"The central bank has raised rates by 500 basis points since late April in an effort to put a floor under the currency".

Ankara has expressed keenness to participate in some of the BRICS institutions, notably the New Development Bank, which was officially opened in 2015 in Shanghai, China's main financial hub.

They dumped the nation's bonds, pushing the yield on the 10-year note up by the most in data going back to 2010.

"The committee assessed that it might be necessary to maintain a tight monetary stance for an extended period".

Furthermore, the weak lira will especially weigh on the country's debt as Turkey has one of the highest levels of external debt among developing countries at 53.4% of gross domestic product, so a weaker lira increases liabilities when converting debt denominated in foreign currencies.

"An emergency hike seems to be the only way out of this loop", Demir said. That's a pace economists say can't last, so the debate now is whether there'll be a controlled slowdown or a disorderly crash.

Tuesday's decision comes just one month after President Recep Tayyip Erdogan won reelection.

The divide between growth and inflation is at the heart of investor concerns about Turkey.

"The downside of the strategy is that it can not go on forever", Neuteboom said.

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