ISTANBUL: Turkey’s lira declined 1% on Wednesday to its weakest level against the dollar in nearly three weeks, under pressure after the government’s defence of former finance minister Berat Albayrak and speculation over his possible return to cabinet.
Dealers said the currency was underperforming emerging market peers, having outperformed them since November when Central Bank Governor Murat Uysal was replaced and Albayrak resigned.
The lira weakened as far as 7.1840 and stood at 7.17 against the US currency at 1200 GMT, compared to a close of 7.11 on Tuesday.
Amid this week’s lira weakness, the central bank raised reserve requirement ratios for lira deposits by 200 basis points.
It said the move would increase lira-denominated required reserves by approximately 25 billion lira ($3.5 billion), while total required reserves in FX and gold are expected to decrease by $500 million.
JPMorgan has told clients it was prudent to take profits on bullish bets on the lira given its recent rapid rise.
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