(Bloomberg) -- Turkey’s central bank modified its reserves rules to free up commercial lenders’ foreign-exchange in an attempt to support the sinking currency. The lira trimmed losses.
The bank said it was lowering the maximum amount of foreign currency lenders can park at the regulator as part of their required reserves. The move will provide them with an additional $2.2 billion, it said.
Modifying reserve requirements is usually one of the first things Turkey’s central bank resorts to in order to prop up the currency. It acted Monday after the lira lost as much as 2.3 percent of its to weaken to a record low against the dollar.
The use of such a marginal tool shows its hand is weak, according Brown Brothers Harriman strategist Win Thin.
“This is chump change and the fact that this is all they can do while the lira is in free-fall is quite disappointing,” Thin said.
The lira trimmed some of its losses after the announcement and was trading 1.8 percent lower at 5.1728 per dollar at 5:44 p.m. in Istanbul.
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