File photo: Hand counting Turkish lira banknotes
Turkey’s state-run lenders re-entered the foreign-currency market on Monday to prop up the lira as the currency’s decline deepened after a holiday, according to traders.
State banks had sold around $1 billion by midday to try and keep the lira from breaking much past 26.07 per dollar, the traders said, asking not to be named because they weren’t authorized to speak publicly on the matter.
The currency depreciated as much as 0.4% on the day and was trading 0.2% lower at 26.0675 per dollar at 1:30 p.m. in Istanbul.
Turkey’s state banks don’t comment on their interventions in the foreign-exchange market.
State banks had halted their regular interventions after the appointment of a new economy team, which signaled it was in favor of curbing dollar sales and letting the market establish the currency’s value.
However, the currency’s decline accelerated and reached almost 10% after the central bank raised its benchmark one-week repo rate to 15% from 8.5% on June 22, well below expectations for normalization of an interest-rate policy based on ultra-low borrowing costs.
The lira has dropped 28% this year, the biggest loss among peers after the Argentinian peso.
