ISTANBUL: Turkey's central bank on Monday halted its foreign-exchange buying auctions with immediate effect and cut the required reserve ratios on foreign exchange deposits with one year maturities and longer.
Earlier on Monday the lira, already trading at its weakest level to the dollar since March 2009, had fallen steeply.
ANALYST COMMENT
MURAT TOPRAK, EMERGING MARKETS STRATEGIST AT HSBC IN LONDON
"This decision is going to be counterproductive, it's just going to provide temporary relief to the Turkish lira. If they just do this and don't do anything else, it's not going to have a lasting impact. The next step would probably be to narrow the interest rate corridor by hiking the borrowing rate, that would give a boost to the carry of the Turkish lira."
GIZEM OZTOK ALTINSAC ECONOMIST - GARANTI SECURITIES
"Halting foreign exchange buying auctions and the latest news on cutting RRRs will give some relief. But if you look at the speed of moves last week this kind of approach will not be enough to change the fundamental way things are going in forex."
Copyright Reuters, 2011
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