The Turkey country-specific ETF plunged Tuesday on growing concerns over President Recep Tayyip Erdogan's hand over monetary policy during a delicate time in the economy's recovery.
Erdogan's personal commitment to addressing "structural problems" and interest rates he views as unfairly high will inject further uncertainty into the country's economic and political situation. In fact, raising rates is the main way central banks around the world contain inflation and support their currency.
After the announcement, the lira, which has fallen by almost 25% this year, dropped 3% versus the USA dollar.
The summit will the second global meeting attended by President Erdogan since the start of his second term, following the North Atlantic Treaty Organisation summit of July 11-12.
The lira, which have lost some 20 percent of its value so far this year, weakened to 4.91 against the dollar following the decision, from 4.7605 directly before.
"Erdogan would prefer not to renege on his repeated campaign pledge to cut rates over the coming months in order to boost economic growth and demand, despite the associated risk of a currency and economic crisis", said Skinner.
Netfiix has new Profile Icons that pull from original programming
By watching on your own profile , we can showcase suggestions for TV shows and movies we're sure you won't want to miss. Users also can set maturity-rating limits on individual profiles to restrict children to only kid-friendly content.
UK's plastic waste may be dumped overseas instead of recycled
Britain has increased the amount it recycles, mostly by sending the waste overseas, the United Kingdom government auditor says. Much of Britain's waste is exported as we do not have the infrastructure to recycle our own plastic.
No moans from Woan about Burnley's Europa League involvement
The Clarets may face action after failing to hold their pre-match press conference on Wednesday because of "technical difficulties" (Jeff Holmes/PA).
Jason Tuvey, senior emerging markets economist at Capital Economics, said the central bank decision showed Erdogan is "already using his strengthened position to influence monetary policy".
"We like to hear policymakers telling us that they will work with markets and bring inflation down and respect the independence of central bank, but we want to see these words backed up with action", said Tilmann Kolb of UBS Wealth Management.
Speaking in parliament Tuesday, Erdogan said the new system would enable Turkey to reach its goals and that worldwide investors would profit.
The sole economist to predict the bank would keep rates on hold, Muammer Komurcuoglu of Is Invest, said the bank was probably concerned about growth in the second half of this year.
To assuage investors, the minister had earlier promised the central bank would remain independent. Opponents say the government's new anti-terrorism bill, now being debated in parliament, will give Erdogan with sweeping security powers.