THE TURKISH central bank has hiked rates dramatically in a bid to stabilise the value of its currency. In a shock announcement at midnight Ankara time, the bank raised its overnight lending rate to 12 per cent, up from 7.75 per cent, and upped its overnight borrowing rate from 3.5 to eight per cent. It also increased the one-week repo rate to 10 per cent from 4.5 per cent. The lira surged, hitting 2.98 to the euro after spending most of the day around 3.10. Benoit Anne , emerging market strategist at Societe Generale called the hikes "punchy, aggressive and credible". Reserve Bank of India governor Raghuram Rajan announced another surprise increase in interest rates, bringing the country's benchmark rate to eight per cent. The MSCI Emerging Markets index is down by more than 100 points, over a 10 per cent drop from its October peak, and nearly 25 per cent down from 2011's peak. However, the index is still in a better position than it was during last summer's taper tumult. "Emerging markets are over reacting to Fed tapering and the reaction has been far too indiscriminate," said Ashmore's Jan Dehn . ALLISTER HEATH : Page 2 ..
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