Margin Call? Turkish Lira Flash-Crashes As Central Bank Intervention Fails

Update 2: Turkey's Lira was in freefall as it was, after CBRT's dollar liquidity boost was shrugged off, but shortly after the US equity market close - perhaps suggesting a margin call - the Lira flash-crashed an additional 10 handles in a few minutes...

And in context for the day...

How long before Erdogan resorts to capital controls?

*  *  *

Update 1: It is becoming increasingly clear that, despite his claims of omnipotence, Turkey President Erdogan has officially lost control of his nation's currency.

For a few very brief moments, the Lira bounced after the stopgap central bank measure... but has now returned to freefall mode.

*  *  *

In an ominous sign for Turkey, moments ago the central bank announced it was pulling a page from the Chinese central bank playbook, and lowered its reserve requirement ratio lower to 40% from 45%, in a move that was meant to boost dollar-strapped bank liquidity by some $2.2 billion USD.

The central bank statement is below:

The upper limit for the FX maintenance facility within the reserve options mechanism has been lowered to 40 percent from 45 percent and tranches have been determined as follows;

With this revision, approximately 2.2 billion US dollars of liquidity will be provided to banks.

It's ominous, because while the Turkish Lira initially moved higher in kneejerk response, it has since recovered all gains and is back to unchanged.

Whether this indicates a loss of central bank credibility, or simply the market's warning that $2.2BN is nowhere near enough to satisfy the financial system's liquidity shortfall, Turkey is approaching a dangerous area where no matter what the central bank does - absent a dramatic rate hike of course which Erdogan will likely never greenlight - the currency's freefall may continue, culminating with both a currency and economic crisis.

 

Comments

FireBrander Plunge Protection Mon, 08/06/2018 - 10:35 Permalink

Re-post, but what else is there to say?

 

1. Lock the border and ports to shut down ILLEGAL "Immigration".

Result: Italians cheer and the "immigrants" head for Spain, France, etc.

 

2. End all "financial support" to ILLEGAL ALIENS in Italy.

Result: They all jump a train to Germany, France, Spain, Sweden...SEE YA!

 

3. If Brussels complains, tell them to F'Off and begin warming up those Lira printing presses. Start talking about how Italy's debt is due to abusive/predatory behavior on the part of Germany that uses the EU to run/enforce it's strip mining operation of it's "poorer" neighbors.

 

4. Make Italy Great Again (MIGA!) and end it's Vassal status to the EU/Germany/France.

In reply to by Plunge Protection

Free This FireBrander Mon, 08/06/2018 - 10:57 Permalink

What Turkey's lol The Lira is in flames due to the King they just coronated! He is a fool on a fools errand. A backstabber, in nato, and dealing with Russia at the same time.

He is about to get a bite right in the rump!

He holds Europe hostage with the sand people he has there! It is he that has the problem.

Europe for sure is unwise to accept these invaders!

In reply to by FireBrander

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In reply to by Buckaroo Banzai

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To Hell In A H… Mr Twitch Mon, 08/06/2018 - 17:21 Permalink

The Turkish Central Bank purchased a shit tonne of US dollars to bolster its foreign reserves, which in theory should have halted the slide of the Turkish Lira.

But such is the Jewish rigged FOREX-Money markets system, they just chose a figure the Lira would be worth today and hammered it. There is no economic logic justifying the attack on the Lira, but as many others have alluded to. There are no fucking markets. No price discovery etc. It's just a fully rigged and manipulated system which needs destroying.

In reply to by Mr Twitch

To Hell In A H… Mon, 08/06/2018 - 17:06 Permalink

Erdogan and the Turkish elite, should grow a pair of Cojones and start an alternative to Swift and the BIS with Iran and countries willing to join the system.

Do it for the sake of future Turkish leaders and for Turks yet top be born. Leave this rotten Jewish controlled system and be founder members of an alternative financial system, and market the new alternative system as free of politics, free of USSA malice and free from USSA financial abuse. 

pcrs Mon, 08/06/2018 - 17:20 Permalink

Watch the Turkish economy from lifting off because of cheap exports. Catering currency and capital flight are sign of property in this Key sian world. 

SteveK9 Mon, 08/06/2018 - 19:40 Permalink

Lesson: Find a way to develop without borrowing Dollars.  It will be hard, but the alternative is to watch your country go down the drain, if Washington so decides.  Russia finally got the message and is removing the dollar from all of its finances, as quickly as possible.  A country like Russia doesn't really need to borrow money at all ... although it is not clear they realize this.  They can print rubles and develop everything internally.  It would be more efficient to buy machine tools from Germany, for example, but they don't have to do that.  Turkey isn't in the same boat.  It does need some friends and it better start looking for them.  Can they trust Russia and China?  Can Russia and China trust them?  One thing is clear, Turkey had better not trust the US any longer.