After the last change in the Central Bank and the fluctuations in the lira due to the policy change concerns, the TRY swap rates in the foreign money markets in London have also come to the fore. As a matter of fact, we see that today, levels of 9000% are seen in TRY O / N rates and it is hovering over 1000%.
You see the intraday course of the TRY O / N interest in the first image and the course of the last 1-year in the second image. The reason for this is; Turkish banks are cutting TRY liquidity in the London market, and with decreasing TRY liquidity it becomes expensive to take short position against TRY. By making short positioning against TRY both expensive and by ensuring that TRY is scarce in the market, it may be desired to break the effect of speculative positioning from abroad. In London, it will be aimed to reduce the TRY fluctuation by squeezing the swap rates and liquidity composition. We saw similar situations against the positioning of foreign banks in 2018 and 2019 exchange rate movements. It’s a short-term measure.
The limit of swap transactions that Turkish banks can make with foreign banks had reduced to 1%, 2% and 10%, depending on the maturity, in the direction of selling TRY before. After the normalization of November 2020, foreign swap limits were gradually increased again.
Kaynak Tera Yatırım
Hibya Haber Ajansı
Kaynak: Hibya Haber Ajansı
