Turkish lira holds firm against U.S. dollar as markets brace for interest rate decision

The Turkish lira is strengthening ahead of the central bank’s January policy meeting.

Turkey’s Monetary Policy Committee is scheduled to meet on Tuesday. Economists are anticipating that officials will refrain from cutting interest rates once again, leaving the benchmark one-week repo rate at 14 percent.

This has allowed the lira to gain about 0.6 percent against the U.S. dollar during the holiday trading session.

The lira has cratered about 80% over the last 12 months, driven by 40 percent inflation amid an institution that continually slashes rates.

President Recep Tayyip Erdogan insists that cutting rates will spur economic growth that will lower inflation.

However, considering how inflation is spiraling out of control, this unorthodox approach to monetary policy might not be working.

At the time of this writing, the USD/TRY currency pair was at 13.4406.