CBRT raised the one-week repo rate by 625 bps
That dwarfs what the market was expecting in the region of around 300 to 500 bps. The lira surged against the dollar to near 6.00 on the announcement from 6.40 levels earlier. USD/TRY has recouped some losses back to 6.15 currently but the Turkish central bank has sent out a message with this one.
The bigger question now will be if they can really maintain their independence moving forward considering Erdogan's comments earlier? Or if this is just a one-time pass to hike rates?
That will be something for markets to digest in the coming days and weeks as no doubt we'll be hearing more from Erdogan and Turkish authorities on the matter. For now though, this should provide the lira a much needed relief in the short-term.
The lira's gains is also proving to be a positive across emerging markets as well with the rand and rouble also gaining on the day, both currencies up by more than 1% against the dollar.
