Central Bank steps in to change reserves rules as currency tumbles
Turkey’s central bank stepped in on Monday to modify its reserves rules to free up commercial lenders’ foreign-exchange in order to boost the country’s sinking currency, Bloomberg reported.
Analysts say the measure is too little to support the currency, which slid to a record low against the dollar on Monday after Washington said it was reviewing the country’s duty-free access to the U.S. market, in a move that may affect approximately $1.66 billion (£1.28 billion) of Turkish exports.
The move by the central bank on Monday, which has lowered the maximum amount of foreign currency lenders can park at the regulator as part of their required reserves, arrives after the lira lost as much as 2.3 percent of its value against the dollar.
The decision will provide lenders with an additional $2.2 billion, Bloomberg said.
“This is chump change and the fact that this is all they can do while the lira is in free-fall is quite disappointing,” Bloomberg quoted Brown Brothers Harriman strategist Win Thin as saying.
The currency trimmed some of its losses after the announcement by the central bank, trading 1.8 percent lower at 5.1728 per dollar at 5:44 p.m. in İstanbul.