Expanding action against the "interest rate lobby," Turkey's banking regulator on July 10 launched an investigation into more than $2bn worth of foreign exchange transactions, as the central bank launched yet more currency sales to shore up the lira after it reached a record low against the dollar.
The Banking Regulation and Supervision Agency (BDDK) said that it has started investigating foreign exchange transactions made on July 8 and 9, when the Turkish central bank sold $2.25bn of foreign currency. The Central Bank of Turkey sold a further $1.3bn on July 10, but still watched the lira sink close to TRY1.96 to the dollar.
The BDDK has instructed banks to ask for details of auction bids on all transactions of over $2m, as it looks into possible market manipulation, Reuters reports. The move follows that of the Turkish Capital Markets Board, which last month launched an investigation into financial orders made through brokerages. That inquiry focuses on transactions between May 20 and June 19, when the main exchange fell by more than 15,000 points.
Both the BDDK and the Capital Markets Board say that the probe into recent transactions are a routine matter. However, according to the Financial Times, market participants said the inquiry went into extensive detail, seeking to identify who has recently sold lira as well as the size of transactions.
There is concern that the investigations could deter international investors from the Turkish market, where weeks of violent clashes between protesters and police around Taksim Square have already raised fears about the country's stability. Prime Minister Recep Tayyip Erdogan remains defiant in the face of resumed action on the streets, and last month threatened to "throttle" speculators as he accused an ill-defined "interest rate lobby" of manipulated the demonstrations.
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