Turkish lira volatile on Erdogan remarks, Fed fears

GMT 03:40 2015 Saturday ,07 March

Arab Today, arab today Turkish lira volatile on Erdogan remarks, Fed fears

President Recep Tayyip Erdogan
Ankara - Anadolu

The Turkish lira dropped to 2.5773 against the dollar on Friday after remarks by the Turkish president, before climbing as high as 2.6315 after strong U.S. employment data was released.
President Recep Tayyip Erdogan made a statement Friday at about 11:30 GMT that he would meet Central Bank of Turkey governor Erdem Basci and the Deputy Prime Minister in charge of the economy, Ali Babacan, to discuss the bank's policy of linking interest rate cuts to the inflation outlook.
The news that the president, who has been strongly critical of the central bank's interest rate policy, would hold the meetings calmed a run on the Turkish lira, which has hit several record lows against the dollar in the past week.
The Turkish lira dropped to 2.5773 on the news at 12:04 GMT.
But, at 13:30 GMT, the U.S. Labor Department released unemployment statistics showing the unemployment rate had dropped to 5.5 percent from 5.7 percent, with 295,000 jobs being added to the economy in robust data which exceeded analyst expectations.
'Solid improvement'
The move prompted market speculation about an imminent interest rate hike by the U.S. Federal Reserve.
Federal Reserve governor Janet Yellen said in her testimony before Congress in February that solid improvement in the U.S economy could spur the Fed to raise interest rates.
A hike in rates would put pressure on all emerging market currencies, as many investors will move funds to the U.S. to take advantage of the rise.
The speculation put further pressure on the Turkish lira and sent it back down to 2.6315 against the dollar at 14:03 GMT.


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