A continuous decline in the price of the Turkish lira against the dollar (Getty)
The interventions of the Central Bank of Turkey did not lead to an injection of Liquidity in the markets To the lira’s calmness against the dollar, after the intervention volume reached about 4.3 billion dollars, the lira continues its decline, recording on Tuesday 14.3 against the dollar.
It was the fourth intervention of the Central Bank on Monday, when it pumped 2.5 billion dollars into the market after the lira plunged to the lowest price in its history, recording 14.5 pounds to the dollar, and the euro exchange rate increased from 16 pounds.
وبدأ Central Bank of Turkey, which has been reluctant to intervene directly in the market since 2014, its direct intervention again in early December by selling 1.4 billion dollars at a time when the exchange rate plunged to 13.6 pounds against the dollar, but thirsty market After the speculators’ war came out into the open, and they frantically bought the dollar, the intervention sums were sucked up.
Then the Central Bank intervened again by about 300 million dollars on December 3, when the lira returned to decline and recorded 13.7 liras against the dollar, but the intervention did not work, so the Turkish currency approached last Friday, December 10, 14 liras to the dollar. The Central Bank intervened for the third time, but without its interventions causing any balance in the money supply, and the lira continued to fall.
Concerns returned to the central bank’s cash reserve, which was estimated before the intervention at about $127 billion.
While no information was released about the meeting of Turkish President Recep Tayyip Erdogan, on Monday evening, with the Governor of the Central Bank, Shehab Kavcioglu, the new Finance Minister Nureddin Nebti, and directors of government banks, private sources confirmed to Al-Araby Al-Jadeed that the reason for the meeting was to discuss solutions. Stop the devaluation of the exchange rate.
The sources added that the Central Bank is not a supporter of lowering the interest rate during the meeting scheduled for tomorrow, Thursday, “but the President and the Minister of Finance are supporters of reducing the interest rate by 100 basis points at least.”
Fears and lack of confidence in the Turkish market will increase if the central bank cuts the interest rate, as expectations go for the currency to plummet to 17 liras to the dollar, although the sources confirmed that “the government has surprises that will be announced in parallel with the rate cut if that is done.”
The sources were satisfied with referring to the continued intervention of the Central Bank, through more than one monetary tool, foreign investments and Gulf support, to control the exchange rate of the Turkish lira, which declined this year from 7.4 liras to 14.3 liras against the US currency.
The Turkish newspaper, “Yeni Şafak”, indicated on Tuesday that President Erdogan’s meeting with economic officials focused on the importance and necessity of reducing the interest rate, noting that Turkish Treasury and Finance Minister Nureddin Nebani will meet with officials of state-run banks, such as Waqf Bank and “Hulk Bank”, in the coming days, to explain the government’s policy of low interest rates and the economic program, and to get their opinions.
According to the Turkish newspaper, Minister Nebti will focus on the difference between the interest rates offered by banks on deposits and consumer loans. He will advocate for bankers to bridge that gap to help stimulate activity in the real sector, while stressing that Turkey’s economic program aims to reduce current account deficits and high economic growth.
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