March 28, 2023

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The Turkish lira is recording the biggest weekly profit since the government’s intervention


The Turkish lira recorded its strongest week as it rose more than 50% until Friday as the market is valued at billions of dollars.

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The currency rose for the fifth day in a row, hitting its size in mid-November, when the pound recorded 10.7 pounds against the dollar at 19:19 GMT.

On Monday, the lira fell to an all-time low of 18.4 against the dollar after months of declines due to concerns over sharp interest rate cuts and a sharp rise in inflation.

But Turkish President Recep Tayyip Erdogan released a plan late on Monday that would protect the central bank and the treasury from losses on deposits converted into Turkish lira.

The lira received great support in the dollar sales carried out by the state banks with the support of the central bank.

In the first three days of this week alone, the central bank’s net foreign reserves fell $ 8.5 billion, down from nearly $ 18 billion in December, according to estimates by three bankers who spoke to Reuters.

Following Erdogan’s announcement of the plan, Reuters quoted four sources, including a senior Turkish official, as saying on Thursday that state-owned banks had sold more dollars this week.

The Turks did not sell dollars on Mondays and Tuesdays, indicating that they have little to no share in the massive market gains, according to official data.

Sellers’ estimates show that government intervention in the market could cost the central bank more than $ 8 billion this week.

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Under Erdogan’s pressure, the central bank has cut interest rates by 500 basis points to 14% since September, despite inflation hovering above 21%.

As the lira depreciates, prices are expected to rise by 30% next year.

Source: “Reuters”