The Turkish lira fell against the US dollar today after the nation’s central bank kept interest rates unchanged, refraining from monetary tightening. The crash of the Russian warplane, shot by Turkish military forces, fueled risk aversion and thus the weakness of the currency.
The Central Bank of the Republic of Turkey kept its borrowing costs stable, leaving its Marginal Funding Rate at 10.75 percent and the borrowing rate at 7.25 percent. Experts say that the central bank would likely to raise rates in the future to bolster the weak currency, but for now policy makers wait for the US Federal Reserve to make its move. Meanwhile, the destruction of the Russian plane strained relationships between Russia and Turkey.
USD/TRY rallied from 2.8511 to 2.8754 as of 14:43 GMT today.
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