(Bloomberg) — The Turkish currency fell the most among emerging-market currencies as locals took advantage of recent lira strength to buy dollars.
The impact of local demand was more visible due to thin trading on Monday, according to traders. The fell as much as 2.6% to 7.8400 against the dollar and was down 1.9% at 7.7830 as of 11:51a.m in Istanbul.
Dollar appetite among local companies and individuals barely slowed last week, even as the lira soared more than 10% on bets President Recep Tayyip Erdogan wouldn’t stand in the way of a long-awaited interest-rate hike. As predicted by most economists, the central bank increased rates by 475 basis points on Thursday.
At the same time, some traders question Erdogan’s apparent shift toward more market-friendly policies and whether the central bank’s monetary policy can remain independent given the president’s opposition to high interest rates.
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