(Recasts, updates numbers, adds details)
ISTANBUL, Sept 12 (Reuters) - The Turkish lira firmed on Wednesday as investors assessed prospects for Thursday’s central bank rate-setting meeting, where policymakers are expected to raise interest rates to underpin the ailing currency.
The currency has lost more than 40 percent of its value against the dollar this year on worries over President Tayyip Erdogan’s grip on monetary policy and, more recently, over a diplomatic spat between Ankara and Washington.
Having remained mostly flat earlier in the week, the lira made gains on Wednesday, firming as far as 6.3425 to its strongest level since Aug. 29.
The lira stood at 6.3525 against the dollar at 1250 GMT, firming one percent from Tuesday’s close of 6.4225.
The central bank did not raise rates at its last meeting in July, confounding expectations. Since then, the lira has lost some 25 percent of its value and data last week showed annual inflation surged to 17.9 percent in August.
Investors expect the central bank to deliver a rate hike in Thursday’s meeting but analyst forecasts for the scale of the increase vary widely as the bank balances concerns over lira weakness with worries about an economic slowdown.
Rate hike predictions ranged between 225 to 725 basis points. (Reporting by Ali Kucukgocmen; Editing by Daren Butler)