Istanbul (dpa) – Turkey’s central bank on Thursday suspended its
one-week repo auctions for an indefinite period of time after the
lira hit its weakest level against the dollar in eight months.
“Considering the developments in financial markets, it has been
decided to suspend the one-week repo auctions for a period of time,”
the bank said on its website.
On Thursday, the lira fell past 6.24 against the dollar, reaching its
lowest point since late September. It slightly recovered to 6.22
following the central bank statement.
The central bank move translates into a hike in the borrowing costs
for banks in Turkey. The central bank is trying to stem further
currency devaluation by limiting the amount of lira which lenders can
The bank has long been under market pressure for an interest rate
hike. Since September, however, it has opted to keep key lending
rates steady at 24 per cent. The bank’s next monetary policy meeting
is on June 12.
The lira and markets have been losing ground since the Supreme
Electoral Board announced on Monday that Istanbul would have to rerun
its contested March mayoral vote.
A currency crisis back in August last year had sent the lira to past
7 to the dollar and more than 8 to euro. One euro currently buys 6.98
The central bank move is only a “stop gap, when [the] real problem is
zero credibility around macro management in Turkey,” Timothy Ash,
emerging markets sovereign strategist at BlueBay Asset Management,
wrote on Twitter.