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US dollar record high against Turkish lira

Xinhua, January 30, 2015 Adjust font size:

The U.S. dollar hitting record high against Turkish lira with 2.41 raised concerns in the market on Friday.

The sharp increase was the result of the expectations that the Turkey's central bank will cut interest rates even further at the Monetary Policy Committee (PPK) meeting to be held on Feb. 4.

The dollar rate started to fluctuate on Jan. 27 after the head of Turkey's central bank Erdem Basci signaled the possibility of new rate cut after the monetary meeting next week.

The latest cut of interest rates came after the monetary policy meeting on Jan. 20. The central bank has lowered down the rates to 7.75 from 8.25 percent by 50 basis points.

According to senior investment consultant of Consultista, Alp Aksudogan, what is important will be the central bank's policy interest rates sealing level.

"The more the central bank lowers the upper limit, the more it will be reflected on the market," he told Xinhua.

There will be another important announcement next week for Turkey's economy: the inflation data for January will be released on Feb. 3.

Aksudogan said the inflation rate has started to follow a downward trend due to the decrease in oil prices and fertile agriculture production as a result of fruitful rain drops and snow.

"Any reduction of the central bank will be within the development of the markets, and in return the dollar rate will remain stable in the short run following the current upward move," he added.

Moreover, he said the foreign investment will remain to stay in the market as there is a positive upward trend in the amount of foreign exchange.

"The potential of foreign investment is expected to be higher in 2015 when compared with last year," he said.

In the meantime, strategist at TEB Investment, Isik Okte, argued that the tendency in dollar has the potential to exceed 2.50 after the end of the second quarter.

"The U.S. central bank (FED) will start to speak load in April or May giving signals that it is going to increase the interest rates. The expectations are high that FED will realize a 25 base point increase in the rates during the meeting on June," he said. Endit