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Further rate cuts likely to add to the lira’s woes

The lira fell to a new low against the US dollar today as a result of a larger-than-expected cut of 200 bp to the 1-week repo rate by Turkey’s central bank (CBRT). Continued pressure from President Erdogan probably means that further cuts are on the horizon, and so we expect the lira to continue to lose ground against the US dollar over the next couple of years.

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