Turkish Central Bank intervenes heavily once again to shore up currency.

By bne IntelliNews July 11, 2013

The Central Bank of Turkey sold USD 1.3bn on Wednesday in six separate forex auctions to support the local currency. This was the second heavy intervention by the Central Bank this week. On Monday, the Central Bank sold a record USD 2.25bn in seven back to back auctions.

Fitch’s warnings about the Turkish economy and its credit rating caused more concerns, hitting the local currency on Wednesday. Turkey looks to have more room for fiscal stimulus, but Fitch expects heightened political unrest and deteriorating market sentiment to constrain its room for manoeuvre, the rating agency said in a non-rating action commentary on Wednesday. Prolonged social unrest, poorly handled, could deter tourism, exacerbate short-term capital outflows, drive-up inflation and damage economic growth, potentially putting Turkey's sovereign rating at risk, Fitch also said.

The Central Bank has sold a total of USD 6.2bn this year, all during the past month. The Bank started forex-selling auctions on June 11. Expectations that the US Federal Reserve would soon start to slow its stimulus programme prompted the sell-off in TRY. The local currency lost around 9% of its value against USD since May. Economists say the Central Bank’s total net reserves are now below USD 40bn and it may sell additional USD 10-15bn to defend the local currency.

Related Articles

Turkish lira nosedives as central bank holds benchmark rate

Turkey's central bank on January 24 left its benchmark interest rate on hold, causing the Turkish lira to immediately nosedive by 1.6% against the dollar and disappointing investors who saw the ... more

Vote clears way for April referendum on Turkish executive presidency

Turkey’s parliament on January 21 approved constitutional reforms that, subject to a "yes" vote in a referendum, will pave the way for an executive presidential system that critics argue would ... more

Turkish exporters' association chief dismisses benefits of fast depreciating lira

The fast depreciation that has afflicted the Turkish lira in recent weeks does not bode well for the Turkish economy and the central bank should be more proactive in combating it when necessary, ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss