Lira is more than 6% higher against the dollar now
Blink and you miss it. From 6.00 levels it was a quick spike lower to 5.88 before bouncing back a little now. That has given yen pairs a bit of a lift as well across the board as a strengthening lira will do well to ease fears of contagion and further worries across the emerging markets space.
Turkish regulators continue to do their part to support the currency - in all ways but rates - as the BDDK announced that it would halve limit for banks' swap transactions. The announcement means that the total amount of foreign currencies and lira swap transactions cannot exceed 25% of banks' legal shareholder equity. This was previously limited to up to 50%.
In essence, this will limit Turkish banks' ability to swap liras for foreign currencies - as they tend to do with foreign banks in order to provide credit facilities to domestic companies.
