Turkey raises rates to support the pound

ISTANBUL (Reuters) – The Turkish central bank has raised its rate by 300 basis points on Wednesday, using the great ways to stem the decline of the pound and regain the trust of investors undermined by the interventionism of president Tayyip Erdogan.

Without waiting for its next monetary policy meeting is scheduled for 7 June, the institution was said to have held an emergency meeting at the end of which the highest rate was increased from 13.5% to 16.5%.

The pound has lost 20% of its value this year, linking the records to the downside, and investors expect its dip compel the central bank to act.

The currency is returned to the rise after the decision and was well established from 2% to 4,5717 for a dollar by the end of the day, while it had earlier touched a new record low of 4,9290.

“It is high time to restore the credibility of the monetary policy and regain the confidence of investors,” said the vice-Prime minister Mehmet Simsek in a tweet posted shortly before the announcement of the central bank.

The motto of the Turkish suffers as a result of fears of interference by the president Erdogan in the monetary policy. The head of State, who is a self-proclaimed “enemy of interest rates,” said last week that it intended to strengthen its prerogatives after the elections of June 24, amplifying concerns about the ability of the central bank to contain a two-digit inflation.

(Daren Butler and Behiye Selin Taner, with the contributions of Orhan Coskun and Claire Milhench, Véronique Tison for the French service)