Markets eye central bank’s rate decision

ISTANBUL – ANKARA

The Turkish Central Bank is expected to raise its overnight lending rate at a policy meeting today, as it signaled that it may do so to stabilize a plunging lira, after intervening in the first half of July to shore up the currency as it sank to record lows.

The Central Bank has sold $6.5 billion at a series of auctions this year to support the Turkish Lira, which slid to its weakest ever against the dollar two weeks ago, mainly due to the U.S. Federal Reserve’s (FED) first strong signals of tapering the high liquidity in the global markets by 2014.

The FED Chairman Ben Bernanke last week said that the FED could begin tapering bond purchases aimed at boosting the economy later this year, but he stressed that could change, depending on how the economy performs. Following the FED’s latest announcement, the lira saw 1.91 against dollar last week after its persistence at record 1.97 levels in the second half of July. This has slightly relieved the Turkish central bank