As reported by Bloomberg, according to traders Turkey’s state-run lenders re-entered the foreign-currency market on Monday to supports the lira as the currency’s decline deepened after the long religious holiday.
State banks had sold around $1 billion by midday to try and keep the lira from breaking much past 26.07 per dollar, the traders said, asking not to be named because they weren’t authorized to speak publicly on the matter.
State banks had halted their regular interventions after the appointment of a new economy team, which signaled it was in favor of curbing dollar sales and letting the market establish the currency’s value.
However, the currency’s decline accelerated and reached almost 10% after the central bank raised its benchmark one-week repo rate to 15% from 8.5% on June 22, well below expectations for normalization of an interest-rate policy based on ultra-low borrowing costs. The lira has dropped 28% this year, the biggest loss among peers after the Argentinian peso.