Turkish lira banknotes are seen in this photo illustration shot January 7, 2014. REUTERS/Murad Sezer/Illustration
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LONDON: The lira's short-lived rebound after a surprise interest-rate increase sent Turkish policymakers a message: A lot more will be needed to arrest the currency's slump. Investors are demanding 71 basis points above the benchmark repurchase rate to own lira-denominated assets rather than U.S. dollars even after rate setters in Ankara tightened policy for the first time in almost three years, according to data compiled by Bloomberg.Those who borrow the greenback to invest in Turkey have lost 11 percent in the past six months because of lira depreciation, the worst carry returns in emerging markets.Policymakers raised the one-week repo and overnight lending rates by 50 and 25 basis points to 8 percent and 8.5 percent respectively, surprising economists who had predicted no change.
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