Mobile  |  About us  |  Photos  |  Videos  |  Subscriptions  |  RSS Feeds  |  Today's Paper  |  Classifieds  |  Contact Us
The Daily Star
FRIDAY, 25 APR 2014
08:20 AM Beirut time
Weather    
Beirut
22 °C
Blom Index
BLOM
1,214.01down
Middle East
Follow this story Print RSS Feed ePaper share this
Turkey intervenes to lift lira from record lows
Agence France Presse
Customers wait for their turn at a currency exchange office in Istanbul on January 23, 2014.  (AFP PHOTO/BULENT KILIC)
Customers wait for their turn at a currency exchange office in Istanbul on January 23, 2014. (AFP PHOTO/BULENT KILIC)
A+ A-

ISTANBUL: The beleaguered Turkish lira recovered from all time lows Thursday after the central bank intervened in foreign exchange markets directly for the first time in two years.

The lira tumbled to 3.1061 to the euro and 2.2909 to the dollar in early trade but recovered to 3.0994 and 2.2688 by midday after the central bank action.

The currency has plunged about 10 percent since mid-December – hitting new lows almost daily this year – battered by the political turmoil and concerns about its gaping currency account deficit.

“It is the first time since January, 2012 that the central bank has resorted to direct intervention in the market by directly calling banks to sell currency,” Deniz Cicek, an economist at Turkey’s Finansbank, said.

“Thus, the bank aims to control the exchange rate.”

The independent bank, under pressure from the government not to raise interest rates to sustain growth that has sharply dropped in recent years, has so far sold dollars through auctions.

The Istanbul stock market meanwhile was down 0.63 percent to 66,940.69 points.

The central bank has so far refrained from hiking interest rates to defend the lira, although market analysts said it had given itself room for maneuver to tighten monetary policy on certain days.

The Turkish treasury Wednesday sold around $2.5 billion debt through the issue of a 10-year dollar denominated eurobond, the first of the year.

Turkey, like other emerging markets, is vulnerable to the U.S. Federal Reserve’s 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.

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 4 percent for this year remains intact, but the European Bank for Reconstruction and Development Tuesday cut its forecast to 3.3 percent.

Turkey is rated at investment grade Baa3 by Moody’s Investors Service, BB+ by Standard & Poor’s and BBB- by Fitch Ratings.

 
A version of this article appeared in the print edition of The Daily Star on January 24, 2014, on page 8.
Home Middle East
 
     
 
Turkish lira / Turkey / Banking & Finance
Advertisement
Comments  

Your feedback is important to us!

We invite all our readers to share with us their views and comments about this article.

Disclaimer: Comments submitted by third parties on this site are the sole responsibility of the individual(s) whose content is submitted. The Daily Star accepts no responsibility for the content of comment(s), including, without limitation, any error, omission or inaccuracy therein. Please note that your email address will NOT appear on the site.

comments powered by Disqus
Story Summary
The beleaguered Turkish lira recovered from all time lows Thursday after the central bank intervened in foreign exchange markets directly for the first time in two years.

The lira tumbled to 3.1061 to the euro and 2.2909 to the dollar in early trade but recovered to 3.0994 and 2.2688 by midday after the central bank action.

The Turkish treasury Wednesday sold around $2.5 billion debt through the issue of a 10-year dollar denominated eurobond, the first of the year.

The government has insisted that its growth target of 4 percent for this year remains intact, but the European Bank for Reconstruction and Development Tuesday cut its forecast to 3.3 percent.
Related Articles
 
 
Turkish central bank stands firm on rates
 
 
Erdogan win seen easing foreign investor exodus
Egypt covers all dollar backlogs for foreign investor repatriations
 
 
How rumor sparked panic in Chinese city
 
 
Arab banks step in as Western rivals cut operations in region
Show More
Entities
Advertisement


Baabda 2014
Advertisement
Follow us on Facebook Follow us on Twitter Follow us on Linked In Follow us on Google+ Subscribe to our Live Feed
Multimedia
Images  
Pictures of the day
A selection of images from around the world- Thursday April 24, 2014
View all view all
Advertisement
Rami G. Khouri
Rami G. Khouri
Israel shows Zionism’s true colors
Michael Young
Michael Young
For Christians, blessed are the dividers
David Ignatius
David Ignatius
An Iran deal is close, but we’re not there yet
View all view all
Advertisement
cartoon
 
Click to View Articles
 
 
News
Business
Opinion
Sports
Culture
Technology
Entertainment
Privacy Policy | Anti-Spamming Policy | Disclaimer | Copyright Notice
© 2014 The Daily Star - All Rights Reserved - Designed and Developed By IDS