According to the news of Bloomberg, Turkish state banks returned to the defense of the Turkish lira after the sharp decline in the value of the lira.
The cessation of dollar sales caused the TL to experience its biggest decline in more than a year and to an all-time low. However, the TL fell further on Thursday, weakening 0.5 percent from 23,3653 at 10:54 in Istanbul. The currency is currently down for 13 days in the longest falling streak since 1996.
A protocol signed between the Turkish Treasury and the Central Bank in 2018 allowed the central bank to intervene in the foreign exchange market through foreign exchange sales through state banks. This week’s sharp depreciation comes after the Treasury suspended the protocol on Wednesday, people with knowledge of the matter told Bloomberg.
According to the information given by the people who asked not to be named, this decision has now been reversed, and right after that, public banks started to appear on the defensive side again on the dollar/TL front. The Federal Reserve and the Treasury and Finance Department declined to comment on Bloomberg’s questions.
Editor’s note: This view is actually confirmed by the fact that exchange rates still continue to rise against the dollar/TL rate on the Euro/TL side. Today, the dollar rate is up 0.50 percent, while the euro rate is up 1.35 percent. Moreover, since there is no significant movement in the euro/dollar parity, there is no possibility that the upward difference is due to the parity.
Footnote: According to the BRSA data, the FX net general position of banks was 43.71 billion TL. The previous figure was at the level of 2.94 billion TL, which indicates an increase of 1386 percent, that is, a very rapid return to a positive foreign exchange position.
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