Turkey's lira trades lower after US Fed stimulus cut
WASHINGTON - Reuters
A television screen on the floor of the New York Stock Exchange shows the decision of the Federal Reserve, Jan. 29. AP photoThe Turkish lira weakened in opening trade on Thursday as the U.S. Federal Reserve's decision to further cut its stimulus overshadowed the effects of a big rate rise by Turkey's Central Bank.
The currency fell below 2.28 to the dollar and was at around 3.11 to the euro in early transactions, compared with 2.25 and 3.06 at the end of trade on Wednesday.
Analysts are closely watching the lira and other emerging market currencies considered vulnerable to the Fed decision, which could prompt many investors to move money out from riskier countries.
The Fed said it would reduce its bond-buying program by $10 billion a month to $65 billion, citing a pick-up in the US economy. That followed a similar announcement in December.
That expected move swamped the impact of a decision on Tuesday by Turkey's Central Bank to double its key interest rate to 10.0 percent to fight a run on the currency in part also prompted by a political corruption scandal.
Anticipation of that decision had lifted the lira out of a long string of record lows to the dollar, but the government expressed opposition to it, fearing it could hobble growth and increase the country's public deficit.