Mon, Jul 18, 2016 - Page 16 News List

Turkey’s central bank to boost liquidity for banks

Reuters, ANKARA

Turkey’s central bank yesterday said it is to cut the commission on daily liquidity options for banks to zero and provide unlimited liquidity to banks to maintain effective operation of the financial markets.

The moves follow a coup attempt on Friday night which is likely to further undermine fragile investor confidence in Turkey ahead of the opening of financial markets today.

The bank in a statement said it would take all necessary measures to protect financial stability and that all central bank markets and systems would stay open until transactions are complete.

If needed, it would increase the current US$50 billion foreign depot limit, it said.

The central bank is holding an extraordinary meeting with bank executives to discuss ways to minimize the market impact of the coup attempt, the Haberturk newspaper reported.

The bank convened members of the Banks Association of Turkey, the Istanbul-based newspaper said, without saying where it got its information about the meeting.

The Turkish lira on Friday plunged its most against the US dollar in eight years as tanks rolled through the streets of Ankara and Istanbul, while warplanes and helicopters circled overhead. Trading in stocks and bonds had already halted for the day and is scheduled to resume today.

The bank is due to meet tomorrow to decide on borrowing costs. It has cut its overnight lending rate by 175 basis points since March.

Turkish Deputy Prime Minister Mehmet Simsek told investors not to worry about the attempted coup, saying yesterday on Twitter that the government was in charge and had decided on “all necessary measures” after consulting with the central bank.

Simsek also said that political stability in Turkey had been strengthened after the failed coup and that macroeconomic fundamentals were solid.

Additional reporting by Bloomberg

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