Turkish Central Bank takes another step for FX market

By Muhammed Ali Gurtas

ANKARA (AA) - The Turkish Central Bank on Thursday raised the upper limit of its forward foreign exchange sale position for the second quarter of this year, the bank announced.

"The calendar for Turkish lira-settled forward foreign exchange sale auctions to be held in the second quarter of 2018 is updated," the bank said.

"During this period, the maximum total amount of forward foreign exchange sale position may increase from its current level of $6.15 billion to $8 billion," said a bank statement.

"The upper limit for the total amount of forward foreign exchange sale position is determined to be $10 billion until end-2018."

The bank's move followed the action of hiking interest rates on Wednesday, in line with its tight monetary policy stance to improve the inflation outlook.

On Wednesday, the bank hiked late liquidity window interest rates, as the borrowing rate was kept at 0 percent while the lending rate was raised from 13.50 to 16.50 percent.

In recent months the Turkish lira has been losing ground to the U.S. dollar. The USD/TRY rate has risen nearly 20 percent since the beginning of this year.

The dollar/lira rate hit an all-time high -- reaching 4.93 -- just before the bank raised rates, versus last year, when one dollar traded for 3.65 lira on average.

On Thursday, the U.S. dollar/Turkish lira exchange rate stood at 4.7580 by market close, down from 4.8390 at the previous close.