Over the weekend the banking regulator announced measures to reduce the possibility of foreign traders betting against the lira, Rabobank reports. The USD/TRY pair almost reached the 6.05 level with the news.
Key quotes
“Throughout last week state banks were intervening to prevent USD/TRY to break above the psychological level of 6.00. After reportedly spending more than USD 4bn, state banks finally capitulated on Friday and USD/TRY spiked to an intraday high of 6.0482.”
“The total amount of currency swaps, forwards and other similar transactions between Turkish and foreign banks has been lowered from 25% to 10% of a bank’s capital.”
“It is worth recalling that last week the S&P classified the lira as a `managed float`.”
“Turkish policymakers intend to achieve the official 5% target for GDP growth by injecting a substantial dose of credit stimulus. Treasury and Finance Minister Albayrak said that state banks agreed to reduce annual loan rates to 8-10% on average. This would be well below the official rate of inflation currently at 12.15% y/y.”
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