Turkey's central bank has risen interest rates in reaction to capital outflows that have pushed the lira down as much as nine per cent against the dollar in the last few months.
The move is a signal the bank will tighten liquidity rather than use any of its foreign exchange reserves to breathe life into the ailing currency.
Its lending rate is now 7.25 per cent - up from 6.5 per cent.
The lira has mainly been weakened by the ongoing uncertainty over the US Federal Reserve’s bond-buying stimulus programme, but also by the public demonstrations against the government last month. The movements in Egypt have caused a little instability as well.
Meanwhile, the one-week repo policy and its benchmark borrowing rates, remained unchanged.
Earlier this month, the central bank said it was against raising the interest rates, claiming a group was conspiring to manipulate them.
By Claire Archer