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As lira stumbles, central bank says closely monitoring financial markets

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After a plunge in the Turkish lira last week, Turkey’s central bank issued a statement on Monday saying that it has been closely monitoring financial markets and would use all instruments to maintain stability.

“The Central Bank will closely monitor fluctuations and unhealthy price formations in financial markets and will use all monetary policy and liquidity management instruments to maintain price stability and support financial stability, if deemed necessary,” the statement on the bank’s website said.

As the Turkish lira fell to nearly 6 against the US dollar on Friday, experts said a strained relationship between the US and Turkey could be the cause of the depreciation of the currency.

Washington has recently sent stronger signals of its displeasure over Ankara’s purchase of a Russian air defense system.

President Recep Tayyip Erdoğan said it was a “done deal” and that Turkey could not step back.

Also, a tweet by US President Donald Trump conveying strong support for Israel’s occupation of the Golan Heights in Syria was responded to with criticism by the Turkish president.

The Turkish lira stood at around 5.6 to the dollar on Monday.

A Bloomberg report on Thursday said the central bank’s international reserves fell $6.3 billion in the two weeks through March 15 to $28.5 billion, adding that officials did not disclose the reason behind the plunge.

“The recent fluctuations in gross reserves are driven by ordinary transactions and periodic factors, and there are no unforeseen incidences,” central bank statement responded.

During a rally in İstanbul on Sunday President Erdoğan, who claims the existence of a foreign plot against the Turkish economy, said the “provocateurs” behind the lira’s depreciation would pay a price.

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