Turkey tightens lira liquidity in bid to boost struggling currency
ANKARA - Anadolu Agency
AFP photoThe Turkish Central Bank skipped its one-week repo auction on Jan. 16, aiming to boost the Turkish Lira by reducing the amount of local currency circulating in markets.
The one-week repo auction - in which local banks borrow lira from the Central Bank - was skipped for the third trading day in row as banks acted to stem the sharp decline in the value of the lira against other currencies.
On Jan. 12 the lira appreciated sharply against U.S. dollar following the Turkish Central Bank’s announcement that it would not hold its usual weekly repo auction, as well as the general declining trend the dollar following the U.S. President-elect Donald Trump’s announcements. The USD/TRY rate tumbled below 3.81 levels from 3.93 liras in the early hours of the day.
The Bank has not held repo auctions since that day, signaling it would continue to skip the practice until volatility in foreign exchange rates calms down.
The Central Bank also cut the borrowing limits of local banks in the Interbank Money Market on Jan. 13, reducing the borrowing limits to a total of 11 billion liras (approx. $2.9 billion), to be effective from on Jan. 16.