Turkish banks intervene again to protect the lira

2023-07-03 20:56:58

Turkey’s state-run banks returned to the foreign exchange market on Monday, selling as much as $1 billion by midday to prop up the lira, following a fresh plunge in the value of the currency following last week’s holiday, according to the agency. bloomberg.

The currency fell 0.4% on the day and was trading 0.3% lower at 26.08 per dollar at 3:25 pm in Istanbul.

Government intervention raised the cost of insuring government default, as markets took into account the impact on the already depleted foreign exchange reserves of the Central Bank of Turkey.

And government banks stopped their usual interventions following appointing a new economic team that indicated that it supported curbing dollar sales and allowing the market to determine the value of the currency.

However, banks have since intervened sporadically to prevent a sharp drop in the lira, according to the agency.

This raises the concern of specialists, some of whom told the agency that “Turkey does not have sufficient foreign exchange reserves, so it seems inevitable that the lira will be allowed to circulate more freely.”

Trading the lira without government support means a decrease in its value, which Ankara seems to want to control.

The lira’s losses since the beginning of the year so far are 28%, which is the largest loss among currencies following the Argentine peso.

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