Turkey’s state banks, including the largest lender by assets, Ziraat Bank, sold $1 billion on Thursday and overnight to curb a depreciation in the lira, sources familiar with the issue told Reuters.
The lira hit its weakest level in eight months on Thursday but recovered overnight. It stood at 6.08 against the US dollar on Friday evening.
The sources did not specify which funds the banks used for the dollar sales, but economists say the banks used dollars sourced from central bank facilities earlier this year to sell into the market to support the lira.
Turkey’s currency recently depreciated over expectations due to a strained relationship between Washington and Ankara as well as US sanctions targeting Iran, which is Turkey’s top energy source.
Additionally, Turkey’s Supreme Election Board (YSK) ruled to hold the İstanbul mayoral election again, stretching out the political uncertainty for at least two more months.
According to some observers, poor economic performance cost the ruling party big cities such as İstanbul, Ankara, Antalya and Mersin in the March 31 local elections.
Source: Turkish Minute