According to Reuters, officials from Turkey's central bank (the CBRT), Turkey's BDDK banking watchdog and the board of the country's banking association are set to meeting on Thursday to discuss recent developments in the economy.

The recent melt-down of the lira, which saw USD/TRY nearly his 13.50 on Tuesday (which at the time meant TRY had lost over 40% of its value versus the US dollar on the year), will be the main topic of discussion. 

Market Reaction

Expectations are building that the CBRT, which cut interest rate by a further 100bps last week to 14.00% (taking the total amount of cuts since September to 400bps, despite inflation nearing 20%), will be forced to turn hawkish to stem the lira's decline. Various banks have been calling for the CBRT to start hiking rates back towards 20.00% in the coming quarters.

These expectations have supported the lira on Wednesday and the news of this meeting will only heighten speculation. At present, USD/TRY is more than 5.0% lower on the day and is trading just to the north of the 12.00 level, having rebounded from earlier session lows close to 11.50.