Turkish residents and institutions sold $3.5 billion worth of foreign currencies in the week to September 30, taking advantage of a drop in the lira following the country's downgrade by credit ratings agency Moody's.
Local foreign currency holdings dropped to $146.4 billion from $149.9 billion over the week, central bank data showed on Thursday. The sell-off came after Moody's followed Standard and Poor's last month in removing Turkey's investment grade credit rating.
Local investors have generally been selling foreign currency holdings when the lira falls below 3 against the dollar, and buying when it is stronger, at around 2.80.
"Locals have acted as a major stabiliser in the currency market, as they have sold FX after every negative news, like the coup attempt or Moody's downgrade," said Erkin Isik, strategist at TEB BNP Paribas.
"However, their forex deposits declined to the lowest level since April 2015. From here, they are less likely to continue selling FX, increasing the downside risks on the currency," he added.
In the week following a failed coup in July, local foreign currency holdings dropped $8.7 billion, in the biggest sell-off since December 2005, when the central bank started publishing the figures.
Comments
Comments are closed.