turkey central bank intervenes after lira hits new low
Last Updated : GMT 23:50:33
Arab Today, arab today
Arab Today, arab today

Turkey central bank intervenes after lira hits new low

Arab Today, arab today

Arab Today, arab today Turkey central bank intervenes after lira hits new low

Istanbul - AFP

The Turkish central bank intervened directly in foreign exchange markets for the first time in two years on Thursday, with "aggressive" dollar sales to prop up the ailing local currency. The lira has been tumbling to record lows almost daily this year, pummelled by an escalating political crisis and concerns about the economy. But it failed to stem the slide, with the lira hitting new lows of 3.1437 to the euro and 2.2970 to the dollar in late trade. The currency has lost about 10 percent since mid-December in turmoil not seen since the 2000-2001 financial meltdown. At the World Economic Forum in Davos, Deputy Prime Minister Ali Babacan insisted that the negative economic impact of the volatility was limited. "The central bank is doing what it can to deal with the current situation," said Babacan, adding the government did not intend to change its growth and inflation forecasts. The central bank said in a statement it was intervening with direct foreign-exchange sales because of "unhealthy price developments". Bankers estimated it had spent in excess of $2 billion, perhaps much more, to prop up the currency as it neared the key threshold of 2.3 to the dollar. Ali Cakiroglu, senior investment strategist at HSBC in Turkey, said it was an "aggressive intervention. "However, it is only a temporary measure," he warned. "Because the market needs motivation. This could be done either by increasing additional tightening days, or explicitly raising interbank rates to nine percent". The central bank has so far refrained from hiking interest rates to defend the lira, with the government reluctant to jeopardise its growth and inflation targets. But there are concerns that the political crisis, sparked by a corruption scandal embroiling members of Prime Minister Recep Tayyip Erdogan's inner circle, will continue to damage investor sentiment. "Turkey is damaging itself with such a blinding quarrel," the head of Turkey's top business association Muharrem Yilmaz said. He was referring to a seething feud between Erdogan and an erstwhile ally, exiled Turkish preacher Fethullah Gulen, who the premier accuses of creating a "parallel" state to try to topple his government. "We are worried about how groups outside politics are impacting politics," Yilmaz added. 'Forex intervention not sustainable' Turkey, like other emerging markets, is also vulnerable to US Federal Reserve plans to taper its monetary stimulus as it reduces access to cheaper funds to cover its account deficit, currently at over 7.0 percent of gross domestic product. It was the first time since January 2012 that the central bank has intervened by dealing directly with banks to sell dollars from its foreign exchange reserves rather than holding auctions. Gokce Celik, economist at Istanbul's Finansbank, warned however that such actions were unlikely to be sustainable. "(The central bank) will need to deliver tightening via a substantial 'proper' rate hike, probably not immediately but eventually, if they are to reverse the depreciation," he said. His view was echoed by UBS economist Reinhard Cluse, who said that with foreign exchange reserves at $37 billion before Thursday's action, "the market's suspect that the CBT's firepower is insufficient to sustain prolonged (forex) intervention". At its highly-anticipated monthly policy meeting on Tuesday, the bank held its key overnight rate at 7.75 percent despite expectations from some in the market for a rise. However, it gave itself room for manoeuvre, saying it would raise interbank rates to nine percent on "exceptional" monetary tightening days. Analysts are forecasting a further slide in the lira because of the political tensions and tepid economic growth, with some suggesting a level of 2.35 to the dollar over 12 months. The government has insisted that its growth target of four percent for this year remains intact but the European Bank for Reconstruction and Development on Tuesday cut its forecast to 3.3 percent.

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

turkey central bank intervenes after lira hits new low turkey central bank intervenes after lira hits new low

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

turkey central bank intervenes after lira hits new low turkey central bank intervenes after lira hits new low

 



Arab Today, arab today
Arab Today, arab today Jordanian woman reveals her project

GMT 00:46 2017 Saturday ,11 November

Jordanian woman reveals her project
Arab Today, arab today Japanese regulators raid Airbnb

GMT 00:44 2017 Monday ,20 November

Japanese regulators raid Airbnb
Arab Today, arab today Keep kids busy at Thanksgiving gatherings

GMT 11:14 2017 Friday ,10 November

Keep kids busy at Thanksgiving gatherings
Arab Today, arab today Saudi, Bahrain target Iran

GMT 00:48 2017 Monday ,20 November

Saudi, Bahrain target Iran
Arab Today, arab today Europe turns on Facebook, Google

GMT 02:26 2017 Monday ,20 November

Europe turns on Facebook, Google
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Australian academic's book pulled

GMT 15:20 2017 Monday ,13 November

Australian academic's book pulled
Arab Today, arab today May under Brexit pressure at EU reform summit

GMT 02:14 2017 Saturday ,18 November

May under Brexit pressure at EU reform summit
Arab Today, arab today Delhi half-marathon to go ahead

GMT 03:51 2017 Saturday ,18 November

Delhi half-marathon to go ahead
Arab Today, arab today The history of solar eclipses

GMT 05:16 2017 Sunday ,20 August

The history of solar eclipses
Arab Today, arab today Driverless, electric future just round

GMT 02:45 2017 Monday ,20 November

Driverless, electric future just round
Arab Today, arab today Tesla unveils its all-electric semi truck

GMT 02:59 2017 Saturday ,18 November

Tesla unveils its all-electric semi truck
Arab Today, arab today Mona Abdel Ghany increased artistic activities

GMT 12:15 2017 Friday ,17 November

Mona Abdel Ghany increased artistic activities
Arab Today, arab today paObama climate envoy slams Trump's rejection

GMT 16:04 2017 Friday ,17 November

paObama climate envoy slams Trump's rejection

GMT 12:22 2017 Thursday ,16 November

Hanan Metawe denies apology for “Major Treason”

GMT 11:15 2017 Thursday ,16 November

Angola oil boss sacked by father's protege

GMT 18:41 2017 Friday ,20 October

Designer Aql Faqih aspires to innovation

GMT 11:38 2017 Wednesday ,15 November

Unloved vultures fight for their survival

GMT 11:49 2017 Thursday ,17 August

Egyptian artist presents new collection of designs

GMT 02:28 2017 Saturday ,18 November

Anti-drug operation nets 4 tonnes

GMT 01:34 2017 Friday ,17 November

Banyan Tree Phuket Takes Festive Season

GMT 17:12 2017 Monday ,07 August

Al-Shawaifi reveals secrets of total solar eclipse

GMT 16:53 2017 Tuesday ,05 September

Youssra depended on colored foam
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday