March 27, 2019 / 9:15 AM / 4 months ago

Turkish banks will squeeze lira in London at least until after Sunday election - sources

ANKARA, March 27 (Reuters) - Turkish banks will continue to withhold lira liquidity in London swap markets at least until after Sunday local elections, three Turkish sources familiar with the matter said, though they added that the measure was temporary.

“The move to not provide lira to the swap markets isn’t a process that can go on for a long time. It will continue until after the elections. The lira is very tight abroad,” one of the sources said.

“These sort of steps aren’t policies that can implemented in the long term. They are done for 10-15 days and during speculative attacks.”

The Turkish lira overnight swap rate in London soared to 700 percent on Wednesday and the weekly swap rate rose to 200 percent, from last week’s 22 percent and 24 percent respectively, according to Refinitiv Eikon data. (Reporting by Orhan Coskun and Nevzat Devranoglu Writing by Ece Toksabay Editing by Dominic Evans)

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