Turkey bank says propping up forex reserves as lira slides

30 March, 2019, 14:57 | Author: Erin Carter
  • U.S. senators introduce bill to stop transfer of F-35 fighters to Turkey

Finance Minister Berat Albayrak said on Thursday that Turkish banks were providing billions of lira to foreign markets and he promised Turkey would enter a reform period after the elections and give details soon.

Turkey's central bank on Thursday sought to reassure investors over its foreign currency reserves after the sharpest drop in the local lira since a spat with the United States triggered a currency crisis past year.

"Investors who try to buy large amounts of foreign currency quickly with the thought that the lira is cheap and will remain that way were not able to find liras for the foreign currency that they acquired", Aydın said.

Inflation, in double digits since 2017, rose to almost 25 percent a year ago. He did not name the banks.

His unorthodox economic views have unnerved investors.

Turkey's president Recep Tayyip Erdogan accused the United States and other western nations of attacking Turkey's economy ahead of Sunday's local elections. The tables have turned.

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Berich explained that the move by the Turkish authorities has supported the currency in the short-term by completely drying up the lira's liquidity and tightening monetary policy without a formal interest rate hike, but that it has dented investor confidence in the Turkish economy in the longer term. "As interest rates are brought down, inflation will fall", Erdogan said. "While they can't do this, the lira firms and dollar falls", Erdogan said.

Instead, however, the lira weakened as far as 5.6465 per dollar on Thursday from 5.33 on Wednesday. The Turkish lira has slipped to an eight-month low against the USA dollar; this follows a slump of 40% in the first eight months of past year. As of 1152 GMT, it had clawed back some of its losses to 5.5861. He added that Turkey needed to "discipline speculators in the market".

"The real problem is interest rates".

Lira turmoil is sensitive for Erdogan before Sunday's municipal elections when his ruling AKP party is battling to win major cities after the economy slipped into recession for the first time in a decade.

Turkey has been receiving contradictory statements from the United States, Cavusoglu said, adding that Turkey had also met its obligations as a partner in the F-35 jet made by U.S. company Lockheed Martin.

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