Turkish lira hits two-week high against dollar following Fed’s rate decision

DAILY SABAH
ISTANBUL
Published 22.06.2015 12:21
Updated 23.06.2015 00:57

After falling to a record low against dollar with the general election results, Turkish lira gets back on track and appreciates as Federal Reserve postpones a possible interest rate hike

The dollar fell back to its lowest value in the last two weeks against the Turkish lira at 2.6618 due to the optimism abroad toward Greece's situation as well as imminent expectations that a coalition government will be formed.

For the last two weeks, the dollar moved between 2.73-2.76 after it was seen at 2.8097 against the Turkish lira. The Turkish lira hit a record low against the dollar on the day after the June 7 general elections, which ended the 13-year single-party government and forced party leaders to hold talks to form a coalition government.

The dollar was traded at 2.6950 against the Turkish lira at the end of the week, falling back under the 2.70 mark mainly because of positive expectations for the formation of a coalition government, the U.S. Federal Reserve (Fed) not changing interest rates, Federal Reserve Board Chair Janet Yellen's dovish comments and U.S. financial performance falling short of expectations.

The continuation of the previous week's general positive outlook pushed the dollar down to the last two week's lowest value against the Turkish lira.

While the dollar traded under 2.67 against the Turkish lira yesterday, the euro traded above 3.03 against the Turkish lira, after falling to 3.0332 due to optimism for an agreement to be reached between Greece and its creditors at the Eurogroup leaders' emergency summit. Analysts claim the Turkish lira is outperforming other developing country currencies, with remarks that there is an increase in the risk appetite abroad, which reflects foreign demand for the assets in developing countries.

If the coalition talks are finalized with an agreement and the foreign optimism continues, some analysts expect the dollar to fall south of the 2.65 level and mark the resistance level at 2.70. Analysts also said the Central Bank of the Republic of Turkey (CBRT) Monetary Policy Committee (PPK) decision on interest rate and developments in politics will have an influence on the direction of the markets.

However, according to an Anadolu Agency financial survey on tomorrow's PPK meeting, no changes in the upper and lower bounds of the interest rate corridor are expected.

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