Turkish Lira top-performing emerging currency after Fed rate hike

ISTANBUL

REUTERS Photo

After the long-awaited rate hike decision was realized by the U.S. Federal Reserve (Fed) on Dec. 16, the Turkish Lira has become the best performer among all emerging currencies against the dollar.The lira gained almost 3 percent in value against the greenback, although the currency was still one of the worst performers over the past year, according to data compiled by Anadolu Agency.The Fed raised the target for its main short-term rate to a range of 0.25 to 0.50 percent, from a range of 0 to 0.25 percent, the first hike since 2006.While the euro, yen and sterling lost around 2 percent in value against the dollar after the Fed’s rate hike, almost all emerging currencies gained around 1 percent, including the Mexican peso and the Indian rupee.The lira was the best performer across all emerging currencies by rebounding to around 2.9 across the greenback.Orkun Gödek, the sales director of Deniz Bank Private Banking Group’s Capital Markets Instruments, told Anadolu Agency emerging currencies had been under pressure ahead of the Fed meeting due to stresses from the South African market.He noted the Turkish government’s new action plan also created additional stress over the lira ahead of the meeting.Analysts also noted domestic terror attacks and geopolitical risks also put the currency under pressure, as well as the Turkish economy’s huge dependence on capital inflow from abroad.