Turkish Lira Extends Loss as Banks Pull Back Before Rate Meeting

The Turkish lira extended losses against hard currencies as traders said state banks had withdrawn support ahead of the central bank’s interest rate-setting meeting on Thursday, Bloomberg reported

The currency fell as much as 2.2% and was trading at 26.88 per dollar as of 10:30 a.m. in Istanbul. That took this year’s depreciation to more than 30%, the second-biggest loss after the Argentinian peso among emerging-market peers.

Turkey’s Monetary Policy Committee is expected to raise its policy rate for a second consecutive month on Thursday, to 18.25% from 15%, according to the median estimate in a Bloomberg survey. Most economists say policy remains too loose given year-end inflation expectations at higher than 40%.

State-run banks, which have frequently sold dollars to support the lira in periods of weakness, have not been doing so recently, according to traders who asked not to be named, citing policy. The state banks don’t announce or comment on their interventions in currency markets.