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Turkish Lira Strengthens Further to 3-Week High

09/08/2022 04:29 PM

The Turkish lira strengthened to 16.7 per USD, the highest in nearly three weeks after the Turkish banking regulator announced that banks would be banned from extending new local-currency loans if foreign exchange on their books is worth more than TRY 15 million and exceeds 10% of their total assets or annual revenues. The Lira remains the worst performer in emerging markets this year, as the country’s interest rates are the world’s most negative once inflation is taken into account. The Turkish Central Bank left its benchmark lending rate steady at 14% despite President Tayyip Erdogan’s pledge to continue slashing borrowing costs, while annual inflation hit a 20-year high of 73.5% in May. Harsh stabilization measures by the central bank and efforts to balance reserve levels have done little to offset negative borrowing costs.

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