Tuesday, August 9, 2011

Central Bank of Turkey Reduces FX lending Rates

The Central Bank of the Republic of Turkey announced a 100 basis point cut in the US dollar lending rate to 4.50% from 5.50%, and the Euro to 5.50% from 6.50%.  The interest rate changes apply to foreign exchange transactions which the Central Bank is a party to, and come into effect as of 9 August 2011.  The Bank commented: "In the upcoming period, developments regarding the foreign exchange markets will be closely monitored and necessary measures will be taken in a timely fashion."  The move comes after the central bank cut its benchmark 1-week repo rate last week by 50 basis points to 5.75% after holding an emergency meeting.

Previously the Turkish central bank held its benchmark interest rate unchanged during its July meeting this year, while the bank last cut its benchmark interest rate by 25 basis points to 6.25% in January this year.  The Turkish central bank also adjusted required reserves in late July.  Turkey reported annual consumer price inflation of 6.2% in June, off from 7.2% in May, but up from 4.26% in April, and 3.99% in March, and above the Bank's full year inflation target of 5.5%.  The Turkish Lira last traded around 1.775 against the US dollar.



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