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.



Trump Suggests Fed May Be Ready to Lower Interest Rates

US President Donald Trump and Federal Reserve Chair Jerome Powell speak during a tour of the Federal Reserve Board building, which is currently undergoing renovations, in Washington, DC, US, July 24, 2025. (Reuters)
US President Donald Trump and Federal Reserve Chair Jerome Powell speak during a tour of the Federal Reserve Board building, which is currently undergoing renovations, in Washington, DC, US, July 24, 2025. (Reuters)
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Trump Suggests Fed May Be Ready to Lower Interest Rates

US President Donald Trump and Federal Reserve Chair Jerome Powell speak during a tour of the Federal Reserve Board building, which is currently undergoing renovations, in Washington, DC, US, July 24, 2025. (Reuters)
US President Donald Trump and Federal Reserve Chair Jerome Powell speak during a tour of the Federal Reserve Board building, which is currently undergoing renovations, in Washington, DC, US, July 24, 2025. (Reuters)

President Donald Trump said on Friday he had a good meeting with Federal Reserve Chair Jerome Powell and got the impression that the head of the US central bank might be ready to lower interest rates.

The two men met on Thursday when Trump made a rare visit to the US central bank to tour the ongoing renovation of two buildings at its headquarters in Washington.

The White House has criticized the cost of the project, and the president and Powell sparred over the issue during the visit.

Trump also took the opportunity to again publicly call on Powell to slash rates immediately.

"We had a very good meeting ... I think we had a very good meeting on interest rates," the president told reporters on Friday.

"He (Powell) said, 'Congratulations, the country is doing really well,' and I got that to mean that I think he's going to start recommending lower rates because of that conversation," Trump said.

The Fed is widely expected to leave its benchmark interest rate in the 4.25%-4.50% range at the conclusion of a two-day policy meeting next week. Powell has said the Fed should wait for more data before adjusting rates.

The visibly tense exchange between Trump and Powell at the Fed's massive construction site on Thursday marked an escalation of White House pressure on the central bank as well as Trump's efforts to get Powell to lower rates.

The US central bank said on Friday it was "grateful" for Trump's encouragement to complete the renovation of its buildings in Washington and that it "looked forward" to seeing the project through to completion.

Trump, who called Powell a "numbskull" earlier this week for failing to heed the White House's demand for a large reduction in borrowing costs, also said on Thursday he did not intend to fire the Fed chief, as he has frequently suggested he would.