ISTANBUL: Turkey’s lira rallied 1% to below 7 versus the dollar for the first time since early August on Monday, extending three months of gains on expectations of tight monetary policy for a long time to come.

The currency was at 6.9750 at 0915 GMT and has risen more than 6% so far this year, by far the best in emerging markets. Earlier it hit its strongest level since Aug. 5 at 6.97.

The currency has rallied more than 20% since a new central bank governor and a finance minister were appointed in early November, raising expectations of more orthodox policy. The bank has since hiked the policy rate to 17% from 10.25%.

The main blue chip Borsa Istanbul BIST100 index traded up 1.05% while the banking index was up 0.66%.

The central bank is expected to hold steady at a policy meeting on Thursday, even as inflation rose to near 15% last month. Most analysts in a Reuters poll predicted the first rate cut would come in the third quarter.—Reuters