Turkish swap rates surge to more than 9,000 percent in lira exit

Turkish lira swap rates in the offshore market jumped to more than 9,000 percent on Tuesday as investors clamoured to close long-lira positions and failed to find counterparties.

The rates later eased back to around 1,000 percent, according to figures published by financial data providers including Bloomberg.

The lira slumped by as much as 15 percent on Monday after President Recep Tayyip Erdoğan sacked the chief of the central bank, causing investors to flee the local markets.

The lira traded up 0.2 percent at 7.77 per dollar in Istanbul on Tuesday. State-run banks had sold dollars for liras on Monday to help defend the currency.

Erdoğan fired governor Naci Ağbal on Friday night after he hiked interest rates for the third time in five months to rein in double-digit inflation. He replaced him with Şahap Kavcıoğlu, a former columnist, banker and ex-deputy for Erdoğan’s governing Justice and Development Party (AKP) who has advocated lower interest rates.

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