Marmara University Faculty of Financial Sciences Academician Gökhan Işıl described the Central Bank of the Republic of Turkey (TCMB)'s increase in the overnight lending rate to 46 percent as "a move by the TCMB to obtain high returns in TL from the foreign exchange demand."
Assoc. Prof. Dr. Işıl, who evaluated the decision to “increase the overnight lending interest rate to 46 percent” at the interim meeting held by the TCMB Monetary Policy Committee to evaluate the developments in financial markets, reminded that the Central Bank's overnight borrowing interest rate was kept constant at 41,5 percent and made the following assessment:
“This was a measure to prevent the upward effect of the demand for foreign exchange in the country on the exchange rate. With the overnight lending rate increasing to 46 percent, the market also formed an expectation that the Turkish lira money market yields would be pulled upward. Accordingly, it can be thought that the Central Bank, with the increase of the overnight lending rate to 46 percent, made the TCMB take action to obtain high yields in TL again from the demand for foreign exchange. The TCMB’s sudden intervention according to the economic conjuncture with an extraordinary meeting outside the calendar was also a reassuring intervention by the Central Bank in terms of ensuring price stability.”
