Turkey's Ban on Lira Loans to Some Firms Triggers Rally

  • In Business
  • 2022-06-25 10:37:52Z
  • By Bloomberg

(Bloomberg) -- Turkey stepped up efforts to bolster the lira and cool lending with a surprise measure that bans loans to companies deemed to be flush with foreign-exchange cash, sending the domestic currency on its biggest rally this year.

Most Read from Bloomberg

  • Supreme Court Overturns Roe, Transforming Abortion-Rights Fight

  • Protest Latest: NY, DC Marches Grow as Justice's Home Targeted

  • Justice Kavanaugh Says States May Not Bar Travel to Obtain an Abortion

  • Stocks Roar Back With Best Week in a Month: Markets Wrap

  • Ending Roe Is Institutional Suicide for Supreme Court

The country's banking regulator is restricting commercial lira loans to corporate borrowers if they hold more than 15 million liras ($890,000) in foreign-currencies and if the amount exceeds 10% of total assets or annual sales. The authority, known as BDDK, announced the decision on Friday.

The number of the companies that will be affected by the new rule is around 10.000, but because of a series of exemptions, the final number would be lower, according to a person familiar with the rule who asked not to be identified because he's not authorized to speak publicly on the matter. The firms can buy eurobonds or invest in foreign exchange-protected deposit accounts to avoid restrictions, the person said.

The move, stoked a rally in the lira on Friday, which at one point surged 5% against the dollar, the most this year. The Turkish currency traded up 2.5%, the world's biggest gain versus the greenback on Friday.

The step represents among the most forceful interventions by Turkish authorities in support of the lira, still this year's worst performer in emerging markets. It may prompt companies flush with foreign currency to dump those assets if they want access to new credit in lira, according to Evren Kirikoglu, an independent strategist in Istanbul.

The decision is the latest by Turkey in an effort to stabilize the lira at a time when the country's interest rates are the world's most negative once inflation is taken into account. The differential in borrowing costs will only grow wider as global central banks embark on what may prove to be the most aggressive tightening of monetary policy since the 1980s.

Under pressure from President Recep Tayyip Erdogan to keep rates low, policy makers have instead deployed measures to curb credit growth and make the lira more appealing to savers and companies. On Thursday, the regulator announced another rule that aims to deter lira lending abroad via swaps.

(Added details from a person familiar with the matter on 3rd paragraph, updated market reaction)

Most Read from Bloomberg Businessweek

  • Spotify's Billion-Dollar Bet on Podcasting Has Yet to Pay Off

  • Can Crypto's Richest Man Stand the Cold?

  • Why You Should Quit Your Job After 10 Years

  • The Age of Credibility for Central Banks Is Over

  • The Global Currency Wars Have Begun Because, Well, Inflation

©2022 Bloomberg L.P.


More Related News

Ukraine Latest: Russian Weapons Dumps Hit in Kherson Region
Ukraine Latest: Russian Weapons Dumps Hit in Kherson Region

(Bloomberg) -- Ukraine's military is focusing on a counteroffensive in the southern Kherson region. In recent days, Kyiv's forces have rendered inoperable...

Aramco Profit Surges on High Prices and Strong Demand for Oil
Aramco Profit Surges on High Prices and Strong Demand for Oil

(Bloomberg) -- Saudi Aramco reported a 90% increase in quarterly earnings, following big oil rivals with a surge in profits, driven by higher crude prices...

UK Coal Mine Dilemma Pits Energy Crisis Against Green Goals
UK Coal Mine Dilemma Pits Energy Crisis Against Green Goals

(Bloomberg) -- In the far northwest corner of England, coal mining was so finished that the local museum paying tribute to the industry shut a few years ago ...

UK Inflation Shock Is Within Whisker of Double Digits: Eco Week
UK Inflation Shock Is Within Whisker of Double Digits: Eco Week

(Bloomberg) -- Sign up for the New Economy Daily newsletter, follow us @economics and subscribe to our podcast.Most Read from BloombergAnshu Jain, Deutsche...

China Crisis Wipes Out $90 Billion of Developer Market Value
China Crisis Wipes Out $90 Billion of Developer Market Value

(Bloomberg) -- Chinese developers have suffered a meltdown of at least $90 billion in stocks and dollar bonds this year, with a bursting housing bubble and...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply


  • dark web links
    (2022-06-25 20:27:48Z)

    It's always good to have an 'out of the box' solution to any problem. Don't forget that your affiliate marketing business involves your time, so make sure you have enough time to learn new strategies as well as practice them.

  • deep web
    (2022-06-25 20:53:41Z)

    How to get on the Dark Web is an issue that has been discussed in various forums over the years and not many newbie users of iPhones have any clue on how to get on the Dark Web. The Dark Web is a section on the World Wide Web that is not accessible with any usual means of browsing

  • dark web links
    (2022-06-25 21:13:16Z)

    But this is not always the case. With the aid of special web browser tools, the hackers and other cyber criminals can get hold of the Apple iPhone and infect it with their own viruses and other dangerous programs. So if you are looking for ways on how to get on the Dark Web, then you have to be very careful since your iPhone is a potential prize to the cyber-criminals.

  • dark web sites
    (2022-06-25 21:30:11Z)

    You can also get on the web using special browser add-ons that can help you get on the web with ease. These special web browser add-ons are known as plug-ins and they can be installed in your system.

  • dark web
    (2022-06-25 21:42:30Z)

    To get on the web using these add-ons, you will need to configure your computer settings so that it will allow the browser to access the Internet. There are certain areas that are restricted and cannot be accessed using this tool.

  • work from home jobs
    (2022-06-25 21:54:22Z)

    In the end, these affiliate marketing success tips will help you achieve your goals in no time at all. If you follow through with the strategies you've been taught, you should experience no trouble reaching your affiliate marketing goals. Remember that affiliate marketing success is up to you.

  • affiliate marketing success
    (2022-06-25 22:06:01Z)

    For example, one of the affiliate marketing success secrets revealed articles focuses on the need to understand your audience. It's important that you make sure that what they want or are looking for is represented accurately in your copy


Top News: Business