Lira edges toward all-time low as Turkey targets economic revival

The Turkish lira fell for a fourth straight session on Tuesday and headed toward record lows, as investors fretted about the fallout from the coronavirus pandemic even as Ankara set out plans to revive the hard-hit economy.

Turkey’s Treasury took advantage of a recent drop in yields to sell some $1.6 billion in debt, while the central bank raised forex-lira swap market transaction limits to 40% from 30%, bankers told Reuters.

The lira, which hit an all-time low of 7.24 during a currency crisis in August 2018 – weakened 0.7% to 7.0900.

It has fallen 16% this year amid the COVID-19 outbreak, which has killed 3,461 people. New cases have fallen in recent days, clearing the way for Ankara to begin easing containment measures.

President Tayyip Erdogan said on Monday the government was lifting inter-city travel restrictions in seven provinces and easing a curfew imposed on senior and youth citizens.

Shopping malls, barbershops, and some stores will be allowed to open on May 11 provided they abide by so-called normalization rules. Universities would return to their academic calendar on June 15 under the plan.

Some medical and business leaders cautioned against moving too quickly, but others said they were ready. The industry ministry said most auto factories had resumed production and that all major factories will have restarted by May 11.

“Our industrialists have an appetite to return to production (and) I think the wheels of industry will begin to turn in June,” Istanbul Chamber of Industry Chairman Erdal Bahcivan said in an online meeting.

Yet Sinan Adiyaman, chairman of the Turkish Medics Association, said in an online news conference that normalization measures needed to be taken to avoid jeopardizing progress made against the outbreak.

“The measures … need to be taken independently from market expectations and rather based on scientific, epidemiologist data and in accordance with medical coordination,” he said, adding the slowdown in deaths and confirmed cases were positive.

The chairman of Kigili men’s wear, Abdullah Kigili, said shops will not be ready to open in malls on May 11 but will rather target a June 1 opening.

After the Treasury borrowed some 9 billion lira on Monday, two more bond auctions were held Tuesday, including 4.0 billion lira ($565 million) of its new two-year benchmark bond to primary dealers in non-competitive bids, and 1.5 billion lira in a tap of a five-year CPI-indexed bond before the auctions.

The government also sold a net 3,309.3 million lira of the benchmark bond and 2,272.9 million of the CPI-indexed bond, bringing total sales on Tuesday to around 11.1 billion lira ($1.6 billion).


Turkish cenbank chief defends crisis-era drop in reserves

You might also like