The Turkish central bank (TCMB) yesterday after its second emergency monetary policy meeting in just a month that it had decided to hike its key policy by another 225bp to 17.25% - more or less in line with expectations. Furthermore and equally important the TCMB announced that it plans to intervene in the FX market to prop the ailing lira.

Hence, the TCMB continues to act decisively to stop the lira from weakening and to reduce inflationary pressures. We continue to be impressed and believe the TCMB will eventually succeed and we are getting closer to stabilisation of the lira - and setting it up for a potentially strong rebound. However, the situation remains fragile even though we think we are moving towards more stability.
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