Tur­key cbank tries 'fringe tools' to stem lira’s slide

The Pak Banker - - FRONT PAGE -

Tur­key's cen­tral bank low­ered the cost of dol­lar bor­row­ing for a fourth time this year, seek­ing to halt the lira's slide af­ter the break­down of talks on the for­ma­tion of a new gov­ern­ment sent fi­nan­cial mar­kets tum­bling. The rate for com­mer­cial banks' dol­lar bor­row­ings was low­ered to 2.75 per­cent from 3 per­cent, the cen­tral bank said Fri­day.

The cur­rency slumped to a record low af­ter Pres­i­dent Re­cep Tayyip Er­do­gan's chief ad­viser said the lira is "com­pet­i­tive" at 3 per dol­lar, or about 6 per­cent weaker than Fri­day's open­ing price. Gover­nor Er­dem Basci is set to an­nounce the monthly de­ci­sion for bench­mark in­ter­est rates next Tues­day. In­vestor sen­ti­ment to­ward Tur­key has soured since the rul­ing AK Party lost its par­lia­men­tary ma­jor­ity in June, and a frag­ile three-year truce with au­ton­omy-seek­ing Kur­dish mil­i­tants col­lapsed last month. The cen­tral bank's move won't be enough to sup­port the lira against that back­drop, said an­a­lysts in­clud­ing Yeliz Karab­u­lut, a vice gen­eral man­ager at Alan Menkul Degerler AS in Is­tan­bul.

"These are fringe tools that the cen­tral bank is play­ing with and the mar­ket won't take any no­tice," Karab­u­lut said by phone. "There's an un­cer­tain pe­riod ahead of us un­til Tur­key holds re­peat elec­tions, and it will be a pe­riod of con­tin­ued lira weak­ness."

Prime Min­is­ter Ah­met Davu­to­glu, who's also head of the gov­ern­ing AK Party, said on Thurs­day that ne­go­ti­a­tions with the main op­po­si­tion CHP to form a gov­ern­ment had failed. Opin­ion polls show that a fresh elec­tion might not de­liver the man­date Davu­to­glu is seek­ing for the AKP, po­ten­tially re­turn­ing the coun­try to the same po­lit­i­cal im­passe of the past two months.

Davu­to­glu said par­lia­ment should quickly agree to a new poll to limit dam­age to the econ­omy. Law­mak­ers should ig­nore the Aug. 23 dead­line for form­ing a gov­ern­ment based on the re­sults of the June elec­tion, he said. The lira traded 0.4 per­cent lower at 2.8325 per dol­lar at 12:08 p.m. in Is­tan­bul af­ter ear­lier fall­ing as much as 0.9 per­cent. Bonds also fell.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.