CBRT's Kavcioglu: No basis for rapid lira depreciation versus US dollar

The Turkish central bank governor, Sahap Kavcioglu, tells T24 online newspaper most of the lira depreciation against the dollar in September was due to the Federal Reserve. 

Key comments

''No basis for rapid lira depreciation versus the US dollar.''

''Very difficult for monetary policy to affect food inflation.''

Market implications

Last week, the Fed's chairman, Jerome Powell,  turned the screw on markets when he said that the prospects of a taper announcement in the coming months are live.

Fed chair Jerome Powell said after the conclusion of last week's meeting that the economy is one "decent" monthly jobs report short of meeting the threshold for tapering and will likely begin to do so in November.

This is has firmed the US dollar and weighed on EM-FX. 

Meanwhile, Turkey's lira hit an all-time low against the dollar on Friday, a day after the central bank unexpectedly cut interest rates, reinforcing growing concern over President Tayyip Erdogan's influence over monetary policy.

The central bank's abrupt move on Thursday to ease monetary policy as Erdogan has sought, despite a run-up in inflation, sparked an almost 3% drop in the currency this week. This month's drop is 6.5% so far.

Today, it is trading a further 0.6% lower to 8.8146 so far, down from a high of 8.8905. 

Looking ahead, Fed speakers will remain a key focus this week, led by Chair Jerome Powell, who will join Treasury Secretary Janet Yellen in speaking before Congress on Tuesday.