Turkish lira rebounds after central banks ramp up funding

• The lira stood at 6.5250 against the dollar by 0911 GMT, having firmed as far as 6.4800 from a close of 6.5600.
• The currency - still fragile from a crisis in 2018 - had on Monday shed as much as 10pc so far this year.
• The bank last week cut is policy interest rate by a sharp 100 points to 9.75pc.

ISTANBUL: The Turkish lira firmed 0.5pc on Tuesday, rebounding off lows last touched in September 2018, after the local central bank and the U.S Federal Reserve doubled down on efforts to provide cheap funding in the face of the coronavirus spread.

The lira stood at 6.5250 against the dollar by 0911 GMT, having firmed as far as 6.4800 from a close of 6.5600.

The currency - still fragile from a crisis in 2018 - had on Monday shed as much as 10pc so far this year.

The Fed on Monday promised unlimited dollar funding across the US economy in its latest move to stem the economic damage from the pandemic that has left many countries locked down, setting the stage for a sharp global recession.

On Tuesday, in one of its most aggressive steps to backstop markets and the economy, Turkey's central bank opened a 90-day repo auction with a volume of 15 billion lira and an interest rate of 8.25pc - 150 basis points below its policy rate.

The bank last week cut is policy interest rate by a sharp 100 points to 9.75pc.

It has also slashed reserve requirements and eased the terms of borrowing to flood the financial sector with cheap lira liquidity.

"Banks have been offered targeted additional liquidity facilities to secure uninterrupted credit flow to the corporate sector," the bank said.

Istanbul's main stock index rallied 3.5pc.