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Turkish government banks pump dollar into the markets

Turkish government banks

Turkish government banks are pumping and selling US dollars in local markets, to stop the bleeding of the lira, Bloomberg said.

The move by Turkish government banks comes amid a historic decline in the Turkish lira and a growing demand for foreign exchange.

According to Bloomberg, the government banks’ move represents a rare appearance in the local markets.

Turkey’s foreign exchange sales policy ended last year amid dwindling foreign reserves.

Sources who requested anonymity said that the amount sold by the lenders was less than it was before.

In January last year, then central bank governor Murat Uysal said that government-owned lenders were carrying out transactions in line with regulatory restrictions, and might continue to operate in the currency market.

The Turkish lira continued to recover today, Thursday, after a historic drop to record low levels this week sparked by President Recep Tayyip Erdogan’s defense of interest rate cuts.

The lira was trading at 11.85 by 04:00 GMT, recording a gain of about 1.9% from about 12.0820 Wednesday, according to Reuters agency, and it recorded its lowest level against the dollar on Tuesday at 13.45 liras against one dollar.

The Turkish currency recorded its lowest levels ever against the dollar in 11 consecutive sessions before Wednesday, bringing its losses since the beginning of the year to 45% of its value, and it has incurred about half of those losses since the beginning of last week.

In a related context, Reuters reported that the Turkish Central Bank signed a memorandum of understanding with the UAE Central Bank to enhance cooperation in the field of central banking services.

Two sources told the agency that the two banks had held talks about a possible swap deal.

Turkey and the UAE signed agreements in the fields of energy, technology investments and ports after talks between Turkish President Recep Tayyip Erdogan and Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed Al Nahyan in Ankara.

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