Turkish Lira Pulls Back From Record Low After Central Bank Frees Up Liquidity

One America News Network | 10/10/2017 | Staff
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ISTANBUL (Reuters) – Turkey’s lira pulled back from an overnight record low of 7.24 to the dollar on Monday after the central bank pledged to provide liquidity and cut lira and foreign currency reserve requirements for Turkish banks.

The announcement came after Finance Minister Berat Albayrak said authorities would start implementing an economic action plan on Monday morning, following Friday’s lira crash, which has spread to global markets.

Bank - Lira - Reserve - Requirement - Ratio

The central bank said it cut the lira’s reserve requirement ratio, a cash buffer held by banks, by 250 basis points for all maturity brackets and lowered reserve requirement ratios for non-core FX liabilities by 400 basis points for maturities up to three years.

These moves will free up 10 billion lira, $6 billion, and $3 billion equivalent of gold liquidity in the financial system, the bank said. It also pledged to provide “all the liquidity banks need”.

Lira - Record - Low - Dollar - Asia

The lira hit a record low of 7.24 against the dollar during in Asia Pacific trade. It pared losses after Albayrak’s comments and the central bank announcement, strengthening to 6.4, before weakening again to 6.92 to the dollar at 0543 GMT.

The currency has lost more than 40 percent against the dollar this year, largely over worries about President Tayyip Erdogan’s influence over the economy, his repeated calls for lower interest rates, and worsening ties with the United States.

Lira - Relentless - Fall - Friday - Percent

The lira’s relentless fall turned to meltdown on Friday. It dropped as much as 18 percent at one stage, rattling U.S. and European stocks as investors took fright over banks’ exposure to Turkey.

The renewed lira collapse on Sunday night hit Asian shares, weakened the South African rand and drove demand in global markets for safe currencies including the U.S. dollar, Swiss franc and yen.

Finance - Minister - Albayrak - Interview - Sunday

Finance Minister Albayrak said in an interview published late on Sunday that Turkey has drafted a economic action...
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