Türkiye's central bank convened an emergency session Sunday and lifted its benchmark interest rate by 2.25 percentage points to 17.25 percent, seeking to arrest the lira's slide amid a global pullback from emerging markets.
The currency had fallen about 23 percent since early May, dropping from roughly 1.35 to 1.72 to the dollar. The euro climbed from around 1.65 to 2.14 lira over the same stretch. A previous emergency rate increase on 7 June, which raised the overnight lending rate to 15 percent, had failed to slow the decline. Central Bank governor Yılmaz Durmuş said the pressure was driven by global investor behavior, not domestic conditions.
The backdrop was difficult. Year-on-year inflation came in at 9.9 percent in May, nearly double the government's five percent target for the year. The Istanbul Stock Exchange fell 3.2 percent to 33,132 points, and the benchmark bond yield rose to 21.03 percent. Finance Minister Kemal Ünakıtan proposed scrapping withholding tax for foreign investors and reducing the domestic rate from 15 to 10 percent.
Many analysts doubted the rate move would be sufficient. Some recommended a new IMF arrangement to address mounting public debt and structural inflation.
Historical summary. TurkishPress restated this wire report, first published in June 2006, in its own words.