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Aug 15 2018

Turkey limits forex swap transactions in defence of lira

Turkey’s banking watchdog placed limits on swap transactions that banks can carry out in a latest move by Turkish authorities to defend the lira.

The watchdog placed a limit on the size of the transactions of trades in liras for dollars equal to 25 percent of a bank’s regulatory capital, down from 50 percent, Cumhuriyet newspaper reported citing a statement. Banks may not engage in further trades until those limits have been achieved, it said.

Turkey’s embattled lira climbed 2.2 percent to 6.21 per dollar at 10:05 a.m. in Istanbul on Wednesday, rising for a second day, after it slid to a record low of 7.23 per dollar in early trade in Asia on Monday.

Turkish authorities have taken a series of measures to defend the lira amid a political crisis with the United States over the detention of U.S. pastor Andrew Brunson and other Americans on terrorism charges. Those steps have included the central bank raising interest rates in its regular auctions and freeing up lira and dollar liquidity for banks.

The lira also strengthened on Wednesday after a White House official told Reuters that the United States might impose further sanctions on Turkey “in a few days or a week”, raising expectations that such breathing space might bring calm and allow time for the Turkish government to expediate Brunson’s release.