The Turkish lira is the only gainer across developing nations so far this quarter and some traders said the currency may have been due for a correction.
Tuesday 20, August 2019
The Turkish lira declined the most in the world after the nation’s central bank announced new reserve requirements that will loosen monetary conditions, adding to a negative sentiment that dragged most emerging-market currencies down, reported Bloomberg.
The lira weakened as much as 1.5 per cent to 5.66 per dollar, wiping out this month’s advance after the policymaker set reserve rules that will inject about TRL 5.4 billion ($957 million) and $2.9 billion of gold and foreign-currency liquidity into the market.
The regulatory change determines the amount of cash lenders have to put aside as reserves depending on how much credit they extend and comes just weeks after the policy marker slashed its benchmark borrowing costs by a record 425 basis points.