Turkey has reversed a ban on BNP Paribas, Citigroup and UBS trading the lira having only announced it on Thursday, the same day the currency hit record lows. Regulators are still investigating allegations that the banks’ trading activities and failure to meet their lira liabilities had contributed to the currency’s collapse last week.
The ban always looked like a long shot, as Ankara would have struggled to curb trading in foreign markets. Still, the decision seems to have helped. On Monday the currency firmed slightly. It’s only a short-term boost for President Tayyip Erdogan. His cajoling of the central bank to keep rates low has caused investors to dump the lira. With foreign currency reserves dwindling, he will need to find ways to boost the currency by the back door, such as trading restrictions. The little that’s left of the central bank’s credibility will pay the price. (By Dasha Afanasieva, Reuters)