Turkish lira a record decline against the dollar for a fourth straight day on Tuesday after the central bank decided to keep interest rates unchanged. This leaves without support currency began to depreciate sharply last week due to the failure of negotiations for a coalition government. This caused turmoil in the financial markets in the country, as investors expect to reach early elections.
Following the decision of the Central Bank exchange rate of the pound fell 0.5 percent to 2.8819 per dollar, which is a new historical lows. Since last Thursday, the Turkish currency has lost nearly 4% since the beginning of the year the rate dropped by about 20 percent. Yields on two-year government bonds reached 10.28%, which is the lowest level since June, while the main stock index in Istanbul dropped to their lowest levels since March.
The main interest in the country remained unchanged at 7.5% in its sixth consecutive month. Besides the political instability in the country pressure on the exchange rate of the pound turned and the overall depreciation of currencies of emerging markets. It is due to expectations that the US Federal Reserve will take the first interest rate rise since 2006, and the devaluation of the Chinese yuan.