Turkish authorities are closely monitoring investors who buy large amounts of foreign currency and asked banks to prevent their clients from using the spot market for hedging.
- The central bank has asked commercial lenders to report any big-ticket dollar purchases that might impact the market negatively.
- The Turkish officials also requested banks to advise corporate clients seeking to hedge any possible lira losses to use the futures markets or the central bank’s non-delivered forward market.
- The lira has plunged more than 20% against the dollar in the last two weeks, largely pushed down by a series of aggressive rate cuts that drove inflation to record levels.
- Despite a series of extraordinary measures, including aggressive interventions on the market by the central bank, the rout emerges.
Even though the sales helped to reverse the lira’s plunge in Dec., they weakened the banks’ net reserves that fell to only $8.6B last month, down from $26.4B at the close of November.
TRY USD down -0.39%Source: Bloomberg