Turkish Lira Halts Rally on Concerns About Smaller Interest Rate Hike

The Turkish lira fell for the first time this week on concerns that the expected interest rate hike will be smaller than was previously anticipated by market participants.

Previously, the lira was rallying on speculations that Turkish policy makers will raise interest rates by at least 1 percentage point next week. Now traders are worried that the increase may be smaller if Federal Reserve Chairman Ben Bernanke will be dovish in this week’s speech. Bernanke starts his testimony today and will conclude it tomorrow.

USD/TRY rose from 1.9208 to 1.9265 as of 11:56 GMT today, while its daily high was at 1.9320.

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