Turkish Lira Rallies Despite Interest Rate Cut

The Turkish lira rallied today despite the fact that Turkey’s central bank decided to lower its one-week repo auction rate.
The Central Bank of the Republic of Turkey decided to cut its benchmark interest rate from 19.75% to 16.50% today. The decision followed the cut by 425 basis points in July. The central bank commented on the decision:

Considering all the factors affecting inflation outlook, the Committee decided to reduce the policy rate by 325 basis points. At this point, the current monetary policy stance, to a large part, is considered to be consistent with the projected disinflation path.

USD/TRY dropped from 5.7443 to 5.6518 as of 21:09 GMT today. EUR/TRY declined from 6.3279 to 6.2552, touching the low of 6.1975.

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