image

Turkish lira caps historic week with big lift from Erdogan government

The currency had plunged on Monday to an all-time low of 18.4 to the dollar, after a months-long slide due to unorthodox interest rate cuts and fears of an inflationary spiral.

But late on Monday President Tayyip Erdogan unveiled a scheme in which the Treasury and central bank would reimburse losses on converted lira deposits against foreign currencies, sparking the biggest intraday rally ever.

The anti-dollarisation plan set off four straight days of gains as Turks converted some $900 million worth of hard currencies into lira, according to Finance Minister Nureddin Nebati.

The currency cooled 4% on Friday to 11.85 versus the dollar at 0918 GMT.

The lira got a big boost from what traders and economists called backdoor dollar sales by state banks supported by the central bank.

In the first three days of the week alone, the central bank’s net foreign reserves dropped by $8.5 billion, according to the calculations of three bankers who spoke to Reuters. The drop totalled nearly $18 billion in December, they said.

As of Dec 17, the central bank’s net foreign reserves tumbled to $12.2 billion, from $21.2 billion a week earlier, to levels last hit in May in a reflection of the interventions.

‘USING ALL INSTRUMENTS’

Citing four sources familiar with the operations, including a senior Turkish official, Reuters reported on Thursday that state banks heavily sold dollars earlier this week on the heels of Erdogan’s announcement.

The state banks have not commented on the issue.

The central bank, which was not immediately available for comment, had announced dollar-selling market interventions earlier this month but not this week.

Nebati, discussing interventions on broadcaster NTV on Thursday, said Turkey is “using all the instruments at its disposal in a positive way”.

Hakan Kara, former chief economist at Turkey’s central bank, said on Twitter the bank’s FX sales amount to $17-20 billion this month, including $3 billion on Wednesday alone, though he said it was unclear specifically how they were used.

“State banks provided significant support to the forex balance but it’s not only state banks that are selling dollars,” said a bank trader who requested anonymity.

In 2019-2020, the central bank backed, via swaps, the sale of some $128 billion via state banks to stabilise the lira, depleting Turkey’s foreign reserves and drawing sharp criticism from the political opposition.

Under pressure from Erdogan, the central bank has slashed its policy rates by 500 basis points to 14% since September despite a jump above 21% in inflation. Price rises are set to blow through 30% next year in part due to the lira depreciation.

Reflecting these concerns, Turkish Airlines will raise employee pay by the rate of inflation plus 65% for 2022, according to an agreement with its labour union.

(Reporting by Nevzat Devranoglu and Jonathan Spicer. Editing by Jane Merriman)


Source link

0 0 votes
Article Rating

S’abonner
Notifier de
0 Commentaires
Commentaires en ligne
Afficher tous les commentaires
Reset Password

Avertissement sur les risques :

Le trading peut vous exposer à des risques de pertes supérieures aux dépôts et ne convient qu’à une clientèle avisée ayant les moyens financiers de supporter un tel risque. Les CFD sont des instruments complexes et présentent un risque élevé de perte rapide en capital en raison de l’effet de levier. Entre 74 et 89% des comptes de clients de détail perdent de l’argent lors de la négociation de CFD. Vous devez vous assurer que vous comprenez comment les CFD fonctionnent et que vous pouvez vous permettre de prendre le risque élevé de perdre votre argent. Ce site n’est en aucun cas une offre de conseil en investissement ni une incitation quelconque à acheter ou vendre des instruments financiers. Trader le Forex et/ou les CFD’s implique un niveau de risque élevé, et peut ne pas être approprié car vous pouvez subir des pertes supérieures à votre dépôt. L’effet de levier peut être en votre défaveur.

Vous devez être conscient et avoir une compréhension complète de tous les risques associés au marché et au trading. Le site Union-trader.com peut être amené à produire des commentaires d’ordre général, ce qui ne constitue pas des conseils en investissement et ne doit pas être interprété comme tel.

Veuillez recourir aux conseils d’un conseiller financier extérieur. Le site Union-trader.com décline toute responsabilité pour les erreurs, inexactitudes ou omissions et ne garantit pas l’exactitude ou le caractère complet des informations, textes, graphiques, liens ou autres éléments contenus dans cette documentation. Toute information et toute mise à disposition sur le site ont un caractère privé.