Turkish state banks sold around $4.5 bln last week to support lira – sources

turkish lira
turkish lira

Turkish state banks sold around $4.5 billion last week, two sources told Reuters, including in a flurry of selling late on Friday, to support the lira and stem declines triggered by a decision this week to re-run Istanbul's mayoral election.

The lira closed at5.9955 against the U.S. dollar on Friday, after hitting its weakest level inmore than seven months at 6.2460 on Thursday.

Four sources confirmedthe banks' efforts on Friday to protect the lira.

"The statebanks intervened again between 1800-2000 GMT," an investor source said.

"So [therewere] two interventions in the relatively thin end-of-day U.S. timezone,"the source added, referring to Friday and to dollar selling the previous day.

"We clearlystarted to notice Turkish banks are in the market after the lira firmed to 6.10against dollar on Friday," a senior forex trader at a bank said.

"Banks offeredU.S. dollars until the market was completely illiquid."

The lira has lostas much as 15 percent against the dollar this year, with the latest weaknessdriven by investor concerns over Monday's decision to re-run a mayoral electionin Istanbul that had been narrowly won by the main opposition party.

Turkey's central bank on Thursday effectively tightened policy by funding the market through a higher rate and took additional liquidity steps to bolster the lira.

A rally on Friday in Turkish bonds was driven by buying by local pension funds, the investor source said adding there was "zero sign of offshore buyers" for bonds. A bond rally boosts the country's currency. 

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