Turkish central bank intervenes after lira hits all-time low

January 24, 2014 - 10:51:19 am
ANKARA: The beleaguered Turkish lira recovered from all-time lows yesterday after the central bank intervened directly in foreign exchange markets for the first time in two years.

The lira tumbled to around 3.11 to the euro and 2.29 to the dollar in morning trade but recovered to 3.0922 and 2.2674 in the early afternoon after the “aggressive” central bank action.

It has lost about 10 percent since mid-December — hitting new lows almost daily this year — battered by an escalating corruption scandal rocking the government and concerns about Turkey’s gaping currency account deficit.

The bank said it was intervening with direct foreign-exchange sales because of “unhealthy price developments”. Bankers estimated it had spent between $1.5bn and $2bn to prop up the currency as it neared the key threshhold of 2.3 to the dollar.

Ali Cakiroglu, senior investment strategist at HSBC Bank, said it was an “aggressive intervention”. 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. At its monthly policy meeting on Tuesday, it said it was holding its key overnight rate at 7.75 percent. AFP