ISTANBUL, Jan 30 (Reuters) - Turkey’s lira was little changed on Thursday and remained close to a three-week low against the dollar ahead of a quarterly report in which the central bank is expected to reaffirm its view that inflation will gradually slide this year.
The lira stood at 5.9640 against the U.S. currency at 0530 GMT, weakening slightly from a close of 5.9620. It hit 5.9740, its weakest level since Jan. 8, late on Wednesday.
In its last report in October, the central bank forecast year-over-year inflation would ease to 8.2% by year end. The rate stood at 11.84% in December.
The bank has slashed its policy rate by 1,275 basis points since July, bringing real rates into negative territory for local savers, and has said inflation is headed “broadly in line” with its forecast.
Some investors worry the bank will ease monetary policy too far, leaving the lira vulnerable to another shock, given a Reuters poll showing economists expect Turkish inflation to fall to only 9.6% by year end.
However, Central Bank Governor Murat Uysal said last week that Turkey “will see single-digit levels in inflation starting in the middle of the year,” suggesting the bank is unlikely to shift its forecasts much on Thursday.
The central bank releases its quarterly inflation report with end-year inflation forecasts at 0730 GMT, and later holds a briefing on policy.
The Turkish lira came under pressure in recent weeks as concerns grew over Turkey’s military involvement in Syria and Libya, and over its strained relations with Russia and western allies.
The lira weakened 11% last year, in part due to Turkey’s military incursion in Syria, bringing its two-year losses to 36% in the wake of a 2018 currency crisis. (Writing by Ezgi Erkoyun; Editing by Jonathan Spicer)