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Panic in international banks: They get rid of the Turkish pound

Turkey’s central bank’s foreign exchange reserves have fallen to $ 49.2 billion since July 17

Panic gripped international banks on Tuesday when the Turkish lira’s daily exchange rate (exchange) for foreign trade jumped to 1,050%.

International financial institutions have tried to get rid of the Turkish currency, as the cost of loans in Turkish lira has skyrocketed. However, many of them failed to close positions in the Turkish currency, as a result of Erdogan’s policies and which undermine the pound’s liquidity in international markets, according to sources close to Bloomberg.

International banks were unable to trade due to restrictions by the Turkish government, forcing them to keep the pound at the overnight rate of 1

,050%, the highest level since March.

But yesterday’s movement did not go unoccupied, as banks withdrew their blood today, continuing with massive divestments of the pound, with the Turkish currency recording losses of more than 2.2% against the dollar and the exchange rate exceeding the psychological. limit of 7, formed at 7,084 pounds per dollar

Restrictions by the Turkish authorities are a tactic they have followed in the past, creating a technical liquidity crisis in the pound to prevent an independent devaluation of the currency.

The technological crisis has made it impossible for foreign banks to trade as they did yesterday, with authorities temporarily preventing Turkish banks from trading with Citigroup, UBS and BNP Paribas.

The recent movement of the Turkish authorities follows their strong intervention in the foreign exchange market last week. Dollar sales by state-owned banks to support the pound began after a public holiday, limiting the supply of currency, pushing daily offshore lending rates to their highest level in 17 months.

Turkey’s central bank’s foreign exchange reserves have fallen more than a third since July 17 to $ 49.2 billion, including gold to $ 89.5 billion. Of that, more than $ 54 billion has been borrowed from domestic banks through short-term exchanges, according to the latest available data at the end of June.

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