Turkey pledges to support financial markets during coronavirus crisis: report

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Photo by NeONBRAND on Unsplash

Turkey promised on Monday to support financial markets facing a liquidity crunch as the lira and stocks tumbled again, raising expectations of broader fiscal and monetary support as the country’s reported coronavirus cases rose to 18, Reuters reported.

The spread of the virus threatens a global downturn and, for Turkey, the prospect of back-to-back shocks. A 2018 currency crisis has since sliced some 40 percent off the value of the lira and prompted a brief but sharp recession.

Turkey’s economy recovered strongly toward the end of last year with the help of sharp interest-rate cuts and a big lending boost, both encouraged by Ankara, which before the virus emerged predicted an ambitious 5 percent growth rate this year.

The government has promised support for the hard-hit tourism sector and could tee up broader stimulus when President Recep Tayyip Erdoğan outlines steps to support the economy later this week.

The Turkish lira weakened 0.6 percent against the US dollar on Monday to 6.3725 after briefly hitting 6.4, its weakest level since September 2018. Turkey’s main BIST 100 index plunged more than 5 percent to its lowest level since June.

Turkish Finance Minister Berat Albayrak said measures would be taken to ensure that financial markets have access to liquidity, adding that support will be provided to all sectors of the economy beginning with those more affected.

Economists said Turkey’s central bank could ease by even more given the Fed’s move, despite the lira weakness that could keep inflation elevated.

Separately, the bank has lowered the remuneration rate on required reserves to 6 percent from 8 percent, effective March 20, two bankers with knowledge of the matter said on Monday.

The health ministry on Monday announced 12 new cases of the virus, raising the count to 18. Last week, Turkey became the last big economy to officially report the outbreak and has since closed schools, bars and venues, and halted more flights.

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