May 23 2018

Istanbul foreign exchange bureaus close to survive turbulence

Foreign exchange (FX) bureaus in the Istanbul FX hub of Tahtakale switched off their signs and temporarily stopped trading on Wednesday amidst an extreme dive in the price of the lira, opposition newspaper Cumhuriyet said.

The lira began Wednesday morning at a level of 4.76 before rising to 4.92 and then falling as far as 4.82.

The lira has lost 22.3 percent of its value since the start of the year, a figure only exceeded by the Argentinian peso, which has gone down by 23.3 percent.

However, in recent days the currency’s fall has been expedited following an announcement by President Recep Tayyip Erdoğan that he would intervene to prevent the country’s nominally independent central bank from raising interest rates.

Turkey’s Central Bank has not yet intervened in an attempt to shore up the lira this time, and some have expressed fears that the longer the lira’s slide continues, the less chance it will have of salvaging a Turkish economy that has been heavily dependent on debt denominated in foreign exchange.