Turkey may punish Citi, Deutsche Bank as well as JPMorgan over lira

Turkish regulators may also punish foreign banks such as Citigroup and Deutsche Bank for seeking to manipulate the value of the lira, Hürriyet newspaper reported citing an unidentified banker.

Turkey’s banking watchdog and market regulator said on Saturday that they were investigating JPMorgan Chase & Co. on the same charges.

“They may end up being temporarily or permanently barred from the payments system,” the banker said, according to Hürriyet. “Citibank, JPMorgan and Deutsche Bank are among the international banks being mentioned in this regard.”

The Turkish lira slumped more than 4 percent against the dollar on Friday in echoes of a currency crisis last year. The losses prompted the central bank to suspend lending at its benchmark interest rate of 24 percent and force banks to borrow at higher rates to stabilise the currency.

Interest rates in the overnight swaps market have since surged more than 10-fold to over 300 percent as Turkish banks cut back lending to foreigners in the offshore market.

“I don’t think they will be able to sustain the positions they have taken against the Turkish lira for a third day,” the banker said.