Staff Writer
According to dealers, Turkey’s state-run lenders returned to the foreign exchange market on Monday to support the lira as the currency’s slide continued after a holiday.
The traders, who asked not to be identified because they lacked official permission to talk publicly on the topic, claimed that by midday, state banks had sold almost $1 billion to try and prevent the lira from moving much above 26.07 per dollar.
At 1:30 p.m. in Istanbul, the currency was trading 0.2% down at 26.0675 per dollar, having lost as much as 0.4% on the day.
Regarding their activities in the foreign exchange market, Turkey’s state banks remain silent.
Following the formation of a new economy team, which indicated support for limiting dollar sales and allowing the market to determine the currency’s value, state banks had stopped making their usual interventions.
However, after the central bank increased its benchmark one-week repo rate from 8.5% to 15% on June 22, significantly below expectations for normalization of an interest-rate policy predicated on extremely low borrowing costs, the currency’s drop escalated and reached about 10%.
The lira has lost 28% of its value this year, the most of any comparable currency after the Argentine peso.
