Turkey's central bank hikes rates to combat sell-off

January 29, 2014: 5:00 AM ET
turkey central bank 2
Turkey's central bank heads into a crisis meeting on raising rates to defend the lira, despite government claims that the economy is solid.
NEW YORK (CNNMoney)

Turkey's central bank hiked interest rates Tuesday in an effort to stabilize the country's currency following a sweeping sell-off in emerging markets.

The announcement came following an emergency meeting convened in response to the crisis. The bank increased its key overnight lending rate well beyond what analysts were expecting to 12% from 7.75%.

Other emerging market currencies, including Argentina's peso and India's rupee, have also been hit by expectations that the Federal Reserve and the Bank of England will pull back on their stimulus measures, which have driven inflows to developing economies in recent years.

Related: Emerging markets rattled as anxiety rises

Over the past month, the Turkish lira has sunk to record lows against the dollar, and weakened sharply against the euro. It stabilized Tuesday on expectations that the country's central bank would act, and extended gains following the announcement.

Turkish stocks have also struggled of late as a wide-ranging probe into public sector corruption continues to spook investors.

Police have so far detained scores of high-profile suspects, including the sons of three ministers, a mayor and the chief executive of a major state bank. The investigation has undermined the government of Prime Minister Recep Tayyip Erdogan ahead of national elections in August.

Join the Conversation
Markets
Sponsored by
Index Last Change % Change
Dow 16,919.40 7.29 0.04%
Nasdaq 4,469.94 27.24 0.61%
S&P 500 1,975.09 5.14 0.26%
Treasuries 2.55 0.09 3.53%
Data as of 2:17pm ET
Company Price Change % Change
Bank of America Corp... 15.54 0.20 1.30%
Facebook Inc 74.93 1.22 1.66%
Genworth Financial I... 14.18 -2.09 -12.82%
Pfizer Inc 29.33 -0.14 -0.48%
Yahoo! Inc 36.63 0.95 2.66%
Data as of 2:02pm ET
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.29%4.30%
15 yr fixed3.23%3.29%
5/1 ARM3.33%3.45%
30 yr refi4.26%4.27%
15 yr refi3.20%3.26%
View rates in your area
 
Find personalized rates:
Rate data provided
by Bankrate.com