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7.1 Lira under control of “invisible hand”
Bank of England report shows Turkish lira trading volumes sank in wake of currency crisis and clampdown. Average daily Turkish lira (TRY) trading volumes decreased by 40% y/y in April, the Bank of England (BoE) said on July 24. The decline came after the value of the currency sank in the lira crisis and an Ankara-directed clampdown on offshore market speculating frightened off investors. Releasing details in its semi-annual survey of the London foreign exchange market, the world’s biggest, the BoE said that average daily trading volumes of the lira against the US dollar fell to $33.5bn (£26.9bn) in April from $35.2bn in October 2018 and $56.2bn in April 2018. Turkish authorities in March pressured local banks in March to stop lending lira to overseas counterparts in a bid to squeeze the London lira market, according to market sources previously cited by news agencies. That caused offshore borrowing costs to spike more than 1,000%. The move came before local elections, with voters sensitive to the travails of the Turkish currency. Ankara has regularly blamed foreign “speculators” for the lira’s weakness. Some foreign banks have pulled back from the Turkish lira offshore market because of the volatility and risks involved, several sources familiar with the London market have told Reuters.
39 TURKEY Country Report August 2019 www.intellinews.com