Turkey's central bank unexpectedly raises interest rates to 50%, supporting the lira

Turkey's central bank is expected to raise its one-week repo rate to 50% from 45% on Thursday, thus demonstrating the urgency of propping up the lira. The accelerated depreciation of the lira and worsening inflation outlook could be with the central bank stepping in just two months after policymakers announced the end of the tightening cycle. Prior to the rate hike, the Turkish lira was the worst performer among emerging market currencies this month, depreciating about 3.7% against the dollar. With the March 31 local election rates, there are more fears that the Turkish lira will repeat the mistakes made after last year's presidential election, when the lira fell as much as 7% in a single day.