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An unidentified person said to have direct knowledge of the matter was quoted by Bloomberg on September 17 in a report that said the regulator was now expected to notify the Treasury of its findings. The Treasury may fine the people for violating a 2017 law requiring resident investors to trade derivatives through authorised institutions.
Similar investigations have been mounted by the Capital Markets Board in the past, with the Treasury subsequently opting to not impose fines.
Capital Markets Board chairman Ali Fuat Taskesenlioglu was cited in the report as saying such investigations were “routine,” but didn’t give any details.
The Turkish government banned trading derivatives through unauthorised platforms two years ago. The move came at a time of market volatility.
The Erdogan administration has a difficult relationship with capital markets players as it has frequently accused economic actors and international ratings agencies of conduct that has caused or worsened economic turmoil faced by Turkey.
Turkey’s central bank ups forex reserve ratios by 100 bp ‘to support financial stability’. Turkey's central bank said on September 20 it has increased the reserve requirement ratios for forex deposits and participation funds by 100 bp for all maturity brackets. The move was made to support financial stability, it added.
The regulator said in a statement that the move would result in the withdrawal of around $2.1bn of forex liquidity from the market.
The revised ratios would be effective from the calculation period of September with the maintenance period starting on October 4, the bank added.
Since last year’s lira crisis, and particularly after the currency suffered another bout of weakness earlier this year amid high dollarisation rates, the regulator has come under fire for what critics have claimed are manipulative market tactics to prevent depreciation.
In mid-April, Turkish President Recep Tayyip Erdogan lashed out at the Financial Times after it reported that the central bank had bolstered its foreign currency reserves with short-term borrowed money, leading to concerns that Turkey might not be able to defend itself in the event of a rerun of the currency crisis.
The populist Erdogan also accused the FT and other western media of falsely portraying the Turkish economy as “collapsed, finished”.
Analysts had for weeks been concerned about the unclear reasons behind movements in the central bank’s forex reserves, which became particularly pronounced as the regulator attempted to defend the lira prior to the March 31 local elections that saw recession-hit voters in Ankara and Istanbul deal Erdogan his first major electoral reverses since he came to power 17 years ago.
Economic plan implies Turkish government not likely to tolerate much lira weakening in 2020. Turkey is not likely to tolerate much Turkish lira (TRY) weakness next year if the government’s new medium-term economic plan is anything to go by.
The average TRY exchange rate built into the government’s economic forecasts for the next three years works out as 6 per dollar in 2020, 6.4 in 2021 and 6.74 in 2022, according to Bloomberg calculations. For next year alone, that amounts to a 6% nominal depreciation.
With official is expected to end next year at 8.5% according to government
51 TURKEY Country Report October 2019 www.intellinews.com