Türkiye's central bank may increase interest rates

The Central Bank of Türkiye may raise the interest rate on Thursday to 40% immediately, this seems to be the most effective solution in terms of investment in the country, the Milliyet newspaper said on Tuesday.

"There are different opinions. It is widely believed that the Central Bank will raise the interest rate to 15-20% this week, and then continue the process of raising the interest rate by five percentage points in the next two meetings. But there are those who believe that the bank will raise the interest rate up to 30-40%, immediately making a big increase," the newspaper writes.

It is noted that such a drastic step "seems to be the most effective method."

"In order for foreigners to actively invest in Turkish securities, there should be no further weakening of the Turkish lira and expectations of a further increase in interest rates on treasury bonds," the newspaper notes.

The depreciation of the Turkish lira against foreign currencies has been going on for three weeks. The dollar to lira exchange rate on Tuesday morning is 23.63 lira per dollar. The dollar, for which 18.73 lira was given at the beginning of the year, rose to 19.6 lira before the first round of the presidential elections on May 14. After the elections, the growth of the rate accelerated. The Central Bank of Türkiye has not raised the interest rate for a long time, leaving it unchanged, while now it is at 8.5%. Earlier, President Recep Tayyip Erdogan said that as long as he is in power, interest rates will fall. Experts predict that in the near future the Central Bank will increase the rate due to the situation around the national currency.