Business

Turkey’s state banks boosted lira after Erdogan rescue plan – four sources

A money changer holds Turkish lira and US dollar banknotes at a currency exchange office in Ankara
FILE PHOTO: A money changer holds Turkish lira and US dollar banknotes at a foreign exchange office in Ankara, Turkey December 16, 2021. REUTERS/Cagla Gurdogan

December 23, 2021

By Orhan Coskun, Nevzat Devranoglu and Ebru Tuncay

ANKARA (Reuters) – Urkey’s state banks sold heavily in dollars this week, fueling a recovery in the lira after President Tayyip Erdogan unveiled a deposit protection plan aimed at averting a crisis currency crisis, according to four sources familiar with the moves.

According to official data, and one trader told Reuters they had reduced their foreign exchange reserves by nearly $6 billion on Monday and Tuesday.

The second source, a lead banking adviser, said the state-owned bank’s interventions on Monday and Tuesday totaled $3 billion. Two other sources, including a senior Turkish official, said the interventions were intense and lasted over the weekend.

The three major state-owned banks – Ziraat Bank, Vakif Bank and Halk Bank – did not immediately comment on possible interventions. The central bank was not immediately available for comment.

The lira has rallied more than 50% this week, recovering from record lows, after Erdogan late Monday announced a plan in which the Treasury and central bank would guarantee some deposits in local currency. currency against slippage losses.

During 2019-2020, the central bank supported, through swaps, the sale of about $128 billion through state banks to stabilize the lira, depleting Turkey’s foreign exchange reserves. Earlier this year, sales emerged as a focus of what the political opposition called government mismanagement.

To address the latest market turmoil, the central bank announced five direct market interventions this month that bankers say total between $6 and $10 billion. It did not issue an intervention notice this week.

Official data showed the bank’s net foreign exchange reserves fell to $12 billion last week, from $21 billion a week earlier, as the interventions weighed in.

The government says the deposit protection scheme encourages Turks to hold lira instead of hard currency, which accounts for more than half of local savings.

Analysts have warned that if the lira’s momentum falters and reverses, the scheme could further fuel inflation, add to public debt and eat into foreign exchange reserves.

Faik Oztrak, a spokesman for the main political opposition CHP, said on Twitter that the lira’s spike was “obviously due to foreign currency selling through the back door again”, citing a $6 billion drop in net reserves. on Monday and Tuesday.

Ziraat CEO Alpaslan Cakar, who also heads the Association of Turkish Banks, said overall dollar selling pressure amounted to around $1 billion across markets on Monday following Erdogan’s announcement .

(Reporting by Orhan Coskun, Nevzat Devranoglu and Ebru Tuncay; Writing by Jonathan Spicer; Editing by Bernadette Baum)

https://www.oann.com/turkeys-state-banks-boosted-lira-rally-after-erdogan-rescue-plan-four-sources/?utm_source=rss&utm_medium=rss&utm_campaign=turkeys-state-banks-boosted-lira-rally-after-erdogan-rescue-plan-four-sources Turkey’s state banks boosted lira after Erdogan rescue plan – four sources

Bobby Allyn

USTimeToday is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – admin@ustimetoday.com. The content will be deleted within 24 hours.

Related Articles

Back to top button