June 7, 2018 / 7:53 AM / 2 months ago

Turkish lira weakens as central bank meets

ISTANBUL, June 7 (Reuters) - The Turkish lira weakened 0.4 percent against the dollar due to persisting investor concerns about monetary policy as the central bank gathered on Thursday for its rate-setting meeting.

At 0750 GMT, the lira stood at 4.5735 against the dollar, easing from a close of 4.5560 on Wednesday. It is 17 percent weaker so far this year but has recovered from a record low of 4.9290.

The central bank will announce its rates decision at 1100 GMT.

Worries about President Tayyip Erdogan’s influence over monetary policy after the June 24 presidential and parliamentary elections have driven losses in the lira.

The central bank hiked interest rates by 3 percentage points at an emergency meeting last month and it said it would return to using the one-week repo rate as its benchmark, giving the ailing currency a boost.

A further tightening in monetary policy is expected as annual inflation rose to 12.15 percent in May on the back of high oil prices and recent lira weakening.

In a Reuters poll, eleven out of 16 economists predicted the bank would hike its one-week repo rate, with five each forecasting increases of 50 and 100 basis points.

One economist predicted an increase of 75 basis points and another five forecasted no change to the benchmark rate.

The compound yield on the benchmark 10-year bond stood at 15.28 percent in spot trade.

The main BIST 100 share index fell 0.15 percent to 96,508 points. (Writing by Ezgi Erkoyun; Editing by Daren Butler)

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