Sep 13 2018

Turkish residents buy $1 billion dollars after rate hike strengthens lira

Residents of Turkey have taken the opportunity of a lira strengthened by Thursday’s larger-than-foreseen 625-basis point hike to snap up a billion dollars or more at cheaper prices, Bloomberg reported.

The dollar fell by around 5 per cent to the lira on Thursday as a result of the hike, allowing local investors to boost their dollar reserves at a cheaper rate.

“Local investors bought about $1 billion worth of foreign currency within an hour of the rate move, according to three Istanbul-based currency traders, who declined to be named as they aren’t allowed to talk to the media,” said Bloomberg’s report, written by Constantine Courcoulas and Aslı Kandemir.

“The dollar buyers were mostly local companies, one of the traders said, with another saying the total was up to $2 billion,” said the report.

The rush to buy dollars came on the same day Turkish President Recep Tayyip Erdoğan announced a ban on the use of foreign currency in real estate deals, including the rent and sale of properties, and vehicle leasing.

The measures have been taken in the face of mounting economic problems that had seen the Turkish lira fall almost 40 per cent since the beginning of the year, sparking fears that local businesses will be unable to make payments in foreign currencies.

A previous attempt to buoy the currency saw Erdoğan imploring Turkish citizens to sell their dollar savings and gold and buy lira.