Turkey’s Central Banker Is Said to Pledge to Protect the Lira

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Turkish central bank governor pledged to take necessary steps to protect the lira’s value in a meeting with senior bankers, according to a person with direct knowledge of the matter.

Governor Sahap Kavcioglu told senior members of the Banks’ Association of Turkey on Tuesday that the Turkish central bank is in talks with four counterparts for new swap deals, the person said, speaking on condition of anonymity.

The governor said the central bank may tweak the required reserves rule after consultations with banks in order to boost the credibility of the lira, the person said.

The central bank declined to comment on what was discussed at the meeting.

The lira has weakened more than 15% against the dollar since the governor took office in March, even though he’s pledged to work toward a positive real rate when adjusted for realized and expected inflation, and to maintain tight policy until the bank’s 5% inflation target is achieved.

The central bank under Kavcioglu kept interest rates unchanged for a third meeting this month, but adopted a more hawkish tone as a weak lira and higher global commodity prices continue to cloud the inflation outlook.

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