Turkish Lira Slides Almost 8% After Intervention-Driven Surge

A money changer counts Turkish lira banknotes at a currency exchange office in Ankara, Turkey September 27, 2021. (Reuters)
A money changer counts Turkish lira banknotes at a currency exchange office in Ankara, Turkey September 27, 2021. (Reuters)
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Turkish Lira Slides Almost 8% After Intervention-Driven Surge

A money changer counts Turkish lira banknotes at a currency exchange office in Ankara, Turkey September 27, 2021. (Reuters)
A money changer counts Turkish lira banknotes at a currency exchange office in Ankara, Turkey September 27, 2021. (Reuters)

The lira tumbled almost 8% against the dollar on Monday amid persisting investor concern over Turkey's monetary policy, having surged more than 50% last week after billions of dollars of state-backed market interventions.

The lira was also supported last week by a government move to cover FX losses on certain deposits.

It weakened to as low as 11.6 against the greenback on Monday before trimming losses to trade at 11.35 by 0800 GMT.

"The main exchange rate resistance is at 11.45 and 12.0, with support levels of 10.57 and 10.25," QNB Invest said in a daily bulletin.

Last week's rally brought the Turkish currency back to mid-November levels.

Last Monday, it had plunged to an all-time low of 18.4 per dollar, after a months-long slide due to fears of spiraling inflation driven by a succession of interest rate cuts engineered by President Recep Tayyip Erdogan.

At current levels the currency is still 35% weaker than at the end of last year.

Erdogan unveiled late last Monday a scheme under which the Treasury and central bank would reimburse losses on converted lira deposits against foreign currencies, sparking the lira's biggest intra-day rally.

Turks did not sell dollars in large quantities on Monday and Tuesday of last week, according to official data that suggested they had played little role in the gains. State interventions, meanwhile, cost the central bank more than $8 billion last week, according to traders' calculations.

The central bank sold $1.35 billion in direct forex interventions on Dec. 2-3 to support the lira when it stood around 13.5 per dollar, according to data.

In an interview with broadcaster AHaber, Erdogan said Turks showed confidence in the local currency and deposits increased by 23.8 billion lira after the anti-dollarization plan announcement.

But data from the BDDK banking watchdog showed that after heavy accumulation of dollars the previous week, Turkish individual depositors held $163.7 billion of hard currencies last Tuesday, virtually unchanged from Monday and Friday, when the total was $163.8 billion.

The lira got a big boost last week from what traders and economists called backdoor dollar sales by state banks, supported by the central bank.

Under pressure from Erdogan, the central bank has slashed its policy rates by 500 basis points to 14% since September, despite inflation that has risen to more than 21%. Price rises are set to exceed 30% next year in part due to the lira depreciation, economists predict.

The main BIST 100 stock index in Istanbul rose 2.6% on Monday morning.



Saudi Arabia Establishes Non-Profit Association of Medical Device Manufacturers

The headquarters of the Ministry of Industry and Mineral Resources (SPA)
The headquarters of the Ministry of Industry and Mineral Resources (SPA)
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Saudi Arabia Establishes Non-Profit Association of Medical Device Manufacturers

The headquarters of the Ministry of Industry and Mineral Resources (SPA)
The headquarters of the Ministry of Industry and Mineral Resources (SPA)

Saudi Arabia’s Ministry of Industry and Mineral Resources announced on Tuesday the establishment of the Non-Profit Association of Medical Device Manufacturers, aimed at supporting the development and growth of the medical device industry.

The initiative aligns with the Ministry’s efforts to empower non-profit organizations in the industrial and mining sectors, reflecting its belief in their role in advancing the Kingdom’s economic and social development.

According to a Ministry statement, the Association seeks to encourage high-quality investments in medical device manufacturing, support factories’ compliance with the highest standards of quality and safety, raise awareness about locally produced devices and their advantages, and enhance the export efficiency of Saudi medical products.

The Association will also provide specialized advisory services, foster innovation, and help develop the skills of the workforce in the sector to strengthen its regional and global competitiveness.

The establishment of the Non-Profit Association of Medical Device Manufacturers forms part of the Ministry’s broader efforts to enable the non-profit sector and enhance its role in industry and mining. The initiative aims to increase its contribution and direct impact on the Kingdom’s GDP, in line with the goals of Saudi Vision 2030.