Turkish lira hits new high amid rate hike talk

"Hemati told the media a meeting with the administrators of the Turkish and Russian Central Banks is expected in the near future and he hopes the agreed topics would rapidly come into effect", the Turkish agency said.

The bank raised the one-week repo rate to 24 percent, meaning it has now increased interest rates by 11.25 percentage points since late April, in an attempt to put a floor under the tumbling lira.

The Turkish Central Bank announced the increase despite fears President Recep Tayyip Erdogan - an avowed "enemy of interest rates" - was putting pressure on the bank to keep rates on hold.

The Turkish lira has lost more than 75% of its value against the dollar since January, pushing up the cost of a wide variety of goods. It later shed some of those gains but was still up over 2.7 per cent in value at 6.15 to the dollar.

It said: "Accordingly, the committee has made a decision to implement a strong monetary tightening to support price stability".

Analysts say the lira's plunge last month had been sparked by a combination of concerns over domestic policymaking and a crisis in relations with the United States (US).

Apparently not ruling out further rate hikes, it vowed to "use all available instruments in pursuit of the price stability objective".

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The bank vowed the tight stance in monetary policy would be "maintained decisively until inflation outlook displays a significant improvement" in the statement.

He earlier charged the bank with failing to control inflation and again aired his unorthodox view that low rates bring inflation down.

"Interest rates are the cause, inflation is the result. If you say "inflation is the cause, the rate is the result", you do not know this business, friend", he added.

The lira has lost 40 percent of its value against the U.S. dollar this year over concerns about Mr Erdogan's influence and a diplomatic spat between Ankara and Washington but firmed to 6.01 following the interest rate decision, from more than 6.4176 beforehand.

It was not immediately clear if Erdogan had been aware of the central bank's decision when he made his comments.

Turkey's shopping mall industry has more than $15 billion of debt which firms could struggle to repay if they are unable to generate foreign currency revenues, Belgu said, adding that such decisions may spook foreign investors who account for about $17 billion of a total $58 billion invested in shopping malls.

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