May 29, 2018 / 6:18 AM / a year ago

Turkish lira firms against dollar as Simsek meets investors

ISTANBUL, May 29 (Reuters) - The Turkish lira gained 0.3 percent against the dollar on Tuesday, a day after the central bank said it would return to using the one-week repo rate as its benchmark and as Deputy Prime Minister Mehmet Simsek met investors in London.

Simsek and Turkish Central Bank Governor Murat Cetinkaya will seek to reassure investors about the direction of policy after the lira tumbled 20 percent this year on concerns about President Tayyip Erdogan’s influence on monetary policy.

At 0610 GMT, the lira was at 4.5650 to the dollar, firming from a close of 4.58. Last week it hit a record low of 4.9290, prompting an emergency central bank hike in its highest rate by 3 percentage points to 16.5 percent.

The lira is currently down some 17 percent against the dollar this year.

On Monday, the bank said the repo rate would be set at 16.5 percent and would once again be regarded as the main rate under a new framework taking effect on June 1.

The bank has for years used multiple rates to set borrowing costs, creating a complex system that economists say has made policy less predictable. Adding to their concerns, Erdogan, a self-described “enemy of interest rates” has repeatedly called for lower borrowing costs to boost credit and construction.

Simsek said overnight that he and Cetinkaya would meet 90 portfolio managers, bank executives and analysts in groups between 7 am (0600 GMT) and 10 pm in London.

“We are making intensive efforts for Turkey’s positive decoupling with our decisive police steps, good communication and our strong long-term story,” Simsek wrote on Twitter. (Reporting by Daren Butler; Editing by David Dolan)

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