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While some may be distracted by Italian politics in  the FOMC minutes, awful EZ PMI’s and disappointing UK CPI where both the euro and cable have met YTD lows, the EM’s have been struggling in the resurgence of the greenback and not least the Turkish Lira.  

USD/TRY hit 4.9266 as record high today, forcing the Turkish Central Bank to raise interest rates as a line of  first defence in an attempt to protect the value  of its nation’s curreny. (TRY’s collapse this year has put many Turkish companies that borrowed in foreign currencies at risk of default).

At an emergency meeting on Wednesday, bowing to pressure from financial markets after the government’s rejection of higher borrowing costs plunged the nation into a currency crisis, the Central Bank  raised its late liquidity window rate by 300 basis points to 16.5 percent, according to Bloomberg:

“The central bank acted after three weeks of turmoil on Turkey’s currency markets. Turkish President Recep Tayyip Erdogan, who’s seeking re-election next month, has publicly opposed any moves to raise interest rates, while investors and economists argued that was the only way to halt the rout.” –  

Bloomberg reported.

“It’s high time to restore monetary policy credibility & regain investor confidence,” –

Deputy Prime Minister Mehmet Simsek said on Twitter after Wednesday’s central-bank meeting. Simsek expressed support for the central bank “in doing what’s necessary to stem the slide in lira & achieve price stability.”