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Turkish lira caps historic week with big lift from Erdogan government

Friday, December 24, 2021
Turkish lira caps historic week with big lift from Erdogan government © Reuters. FILE PHOTO: Turkish lira banknotes are seen in this illustration taken in Istanbul, Turkey November 23, 2021. REUTERS/Murad Sezer/Illustration

By Nevzat Devranoglu and Jonathan Spicer

ANKARA (Reuters) - Turkey's lira was on track for its strongest week on record on Friday, having spiked 44% with the support of billions of dollars of state-backed market interventions and a promise that the government would cover FX losses on certain deposits.

The currency had plunged on Monday to an all-time low of 18.4 to the dollar, after a months-long slide due to unorthodox interest rate cuts and fears of an inflationary spiral.

But late on Monday President Tayyip Erdogan unveiled a scheme in which the Treasury and central bank would reimburse losses on converted lira deposits against foreign currencies, sparking the biggest intraday rally ever.

The anti-dollarisation plan set off four straight days of gains as Turks converted some $900 million worth of hard currencies into lira, according to Finance Minister Nureddin Nebati.

The currency cooled 4% on Friday to 11.85 versus the dollar at 0918 GMT.

The lira got a big boost from what traders and economists called backdoor dollar sales by state banks supported by the central bank.

In the first three days of the week alone, the central bank's net foreign reserves dropped by $8.5 billion, according to the calculations of three bankers who spoke to Reuters. The drop totalled nearly $18 billion in December, they said.

As of Dec 17, the central bank's net foreign reserves tumbled to $12.2 billion, from $21.2 billion a week earlier, to levels last hit in May in a reflection of the interventions.

'USING ALL INSTRUMENTS'

Citing four sources familiar with the operations, including a senior Turkish official, Reuters reported on Thursday that state banks heavily sold dollars earlier this week on the heels of Erdogan's announcement.

The state banks have not commented on the issue.

The central bank, which was not immediately available for comment, had announced dollar-selling market interventions earlier this month but not this week.

Nebati, discussing interventions on broadcaster NTV on Thursday, said Turkey is "using all the instruments at its disposal in a positive way".

Hakan Kara, former chief economist at Turkey's central bank, said on Twitter (NYSE:TWTR) the bank's FX sales amount to $17-20 billion this month, including $3 billion on Wednesday alone, though he said it was unclear specifically how they were used.

"State banks provided significant support to the forex balance but it's not only state banks that are selling dollars," said a bank trader who requested anonymity.

In 2019-2020, the central bank backed, via swaps, the sale of some $128 billion via state banks to stabilise the lira, depleting Turkey's foreign reserves and drawing sharp criticism from the political opposition.

Under pressure from Erdogan, the central bank has slashed its policy rates by 500 basis points to 14% since September despite a jump above 21% in inflation. Price rises are set to blow through 30% next year in part due to the lira depreciation.

Reflecting these concerns, Turkish Airlines will raise employee pay by the rate of inflation plus 65% for 2022, according to an agreement with its labour union.

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17-01-2022 20:58:36 (UTC+7)

EUR/USD

1.1421

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EUR/USD

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US Coffee C Futures

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S&P 500

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2,161.55

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Adidas AG

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Deutsche Lufthansa AG

7.241

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 EUR/USD1.1421↑ Sell
 GBP/USD1.3662↑ Buy
 USD/JPY114.50Neutral
 AUD/USD0.7228↑ Buy
 USD/CAD1.2488↑ Sell
 EUR/JPY130.75Neutral
 EUR/CHF1.0430Buy
 Gold1,821.75↑ Buy
 Silver23.113Neutral
 Copper4.4385Sell
 Crude Oil WTI83.84Sell
 Brent Oil86.67Neutral
 Natural Gas4.261↑ Sell
 US Coffee C239.65↑ Buy
 Euro Stoxx 504,302.14↑ Sell
 S&P 5004,662.85↑ Buy
 DAX15,933.72↑ Sell
 FTSE 1007,611.23↑ Buy
 Hang Seng24,335.87Neutral
 Small Cap 20002,161.55↑ Buy
 IBEX 358,838.70↑ Sell
 BASF68.140Neutral
 Bayer52.82↑ Buy
 Allianz227.05↑ Buy
 Adidas252.65↑ Buy
 Lufthansa7.241↑ Sell
 Siemens AG146.00Neutral
 Deutsche Bank AG12.018↑ Buy
Mua/Bán 1 chỉ SJC
# So hôm qua # Chênh TG
SJC Eximbank6,120/ 6,160
(0/ 0) # 1,142
SJC HCM6,110/ 6,170
(0/ 0) # 1,152
SJC Hanoi6,110/ 6,172
(0/ 0) # 1,154
SJC Danang6,110/ 6,172
(0/ 0) # 1,154
SJC Nhatrang6,110/ 6,172
(0/ 0) # 1,154
SJC Cantho6,110/ 6,172
(0/ 0) # 1,154
Cập nhật 17-01-2022 20:58:45
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ↀ Giá vàng thế giới
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Sản phẩmVùng 1Vùng 2
RON 95-IV2400024480
RON 95-II,III2390024370
E5 RON 92-II2291023360
DO 0.05S1838018740
DO 0,001S-V1873019100
Dầu hỏa1719017530
ↂ Giá dầu thô thế giới
WTI$83.77-0.12-0.14%
Brent$86.12-0.03-0.04%
$ Tỷ giá Vietcombank
Ngoại tệMua vàoBán ra
USD22.550,0022.860,00
EUR25.268,1426.684,53
GBP30.226,5831.517,24
JPY192,39203,66
KRW16,5320,15
Cập nhật lúc 08:50:33 18/01/2022
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