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22 May 2014
EMEA EM Express: Turkish central bank surprises with rate cut despite high inflation
FXStreet (Łódź) - The Turkish central bank, which held its monetary policy meeting on Thursday, cut the one-week repurchase rate by 50 basis points to 9.5%, despite the fact that inflation remained elevated. The overnight lending rate and the overnight borrowing rate were left unchanged at 12% and 8%, respectively.
The unexpected move, which came after Governor Erdem Basci's suggestions last month that rates would be kept steady until the inflation outlook improved considerably, was most probably prompted by Turkish PM Recep Tayyip Erdogan's calls for action to support economic activity in the country, ahead of the August presidential elections.
"With the recent decline in uncertainties and improvement in the risk premium indicators, market interest rates have fallen across all maturities," the central bank said the statement released after the monetary policy decision was made known.
Following the announcement the lira weakened by 0.2% to 2.0984 against the dollar, while Turkish bonds gains, with yields dropping to the lows level seen in five months.
Economic data
The Hungarian Central Statistical Office informed on Thursday that year-on-year Gross Wages grew by 2.8% in March, up from 1.7% recored the previous month.
Technicals
At the moment of writing the USD/TRY lira was up 0.07% at 2.0963.
On Wednesday the USD/TRY daily FXStreet Trend Index was slightly bullish, with the OB/OS Index neutral. RSI was at 44 at the last close, and has climbed to 57 so far today. Daily 2-StDev Volatility Bandwidth was shrinking at 198 pips, with ATR (14) expanding at 208 pips. The 1D 200 SMA was at 2.0985, while the 1D 20 EMA was at 2.1012.
The Russian ruble advanced for the fifth running day on Thursday, rising by 0.2% to 39.9555 against the central bank's target basket of dollars and euros. The currency climbed 0.2% to 34.2850 per dollar and rose 0.3% to 46.8880 against the euro.
The unexpected move, which came after Governor Erdem Basci's suggestions last month that rates would be kept steady until the inflation outlook improved considerably, was most probably prompted by Turkish PM Recep Tayyip Erdogan's calls for action to support economic activity in the country, ahead of the August presidential elections.
"With the recent decline in uncertainties and improvement in the risk premium indicators, market interest rates have fallen across all maturities," the central bank said the statement released after the monetary policy decision was made known.
Following the announcement the lira weakened by 0.2% to 2.0984 against the dollar, while Turkish bonds gains, with yields dropping to the lows level seen in five months.
Economic data
The Hungarian Central Statistical Office informed on Thursday that year-on-year Gross Wages grew by 2.8% in March, up from 1.7% recored the previous month.
Technicals
At the moment of writing the USD/TRY lira was up 0.07% at 2.0963.
On Wednesday the USD/TRY daily FXStreet Trend Index was slightly bullish, with the OB/OS Index neutral. RSI was at 44 at the last close, and has climbed to 57 so far today. Daily 2-StDev Volatility Bandwidth was shrinking at 198 pips, with ATR (14) expanding at 208 pips. The 1D 200 SMA was at 2.0985, while the 1D 20 EMA was at 2.1012.
The Russian ruble advanced for the fifth running day on Thursday, rising by 0.2% to 39.9555 against the central bank's target basket of dollars and euros. The currency climbed 0.2% to 34.2850 per dollar and rose 0.3% to 46.8880 against the euro.