The decline in the Turkish lira continued on Friday after the country’s central bank had surprisingly cut interest rates. In return, both the dollar and the euro marked a record high for the second day in a row at 9.6581 and 11.2424 lira, respectively. “The case is a prime example of the loss of confidence in the financial markets,” says Thomas Gitzel, VP Bank’s chief economist. Instead of countering the devaluations and the high inflation rate of almost 20 percent with interest rate increases, the central bankers have loosened the reins of monetary policy. “Confidence-building measures look different.”
The Russian central bank, on the other hand, raised interest rates unexpectedly sharply. That gave the local currency additional tailwind. In return, the dollar and euro have fallen to their lowest level in relation to the ruble in about a year and a half. The central bank screwed the key rate to 7.5 from 6.75 percent and signaled further increases. Meanwhile, the euro moved slightly up against the US currency and was quoted at 1.1635 dollars in the early evening.
The recently somewhat weaker dollar and growing inflationary pressure boosted the demand for gold. A troy ounce of the precious metal rose 1.3 percent to $ 1805.
Oil prices went up again. Sentiment turned after losses in early trading and prices made the leap into profitability. The most recent countermovement was therefore short-lived. A barrel of North Sea Brent last cost $ 84.75. That was 0.2 percent more than the day before. “The sharp rise in prices makes crude oil susceptible to profit-taking,” says Ravindra Rao, manager at the brokerage house Kotak. “But there will probably not be a major correction before the global energy crisis is over.”