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Turkey stepped up efforts to bolster the lira and cool lending with a surprise measure that bans loans to companies deemed to be flush with foreign-exchange cash, sending the domestic currency on its biggest rally this year, Bloomberg News reported. The country’s banking regulator is restricting commercial lira loans to corporate borrowers if they hold more than 15 million liras ($890,000) in foreign-currencies and if the amount exceeds 10% of total assets or annual sales. The authority, known as BDDK, announced the decision on Friday.
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Turkey is planning to offer local-currency liquidity to foreigners at the same rate as domestic investors, so long as the funding doesn’t reach those betting against the lira, Bloomberg News reported. Under a program designed by the Treasury and Finance Ministry and expected to go into effect early next month, offshore investors will be able to access a new swap line with a maturity of at least three to six months to buy local assets, according to an official with direct knowledge of the matter.
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The operator of Istanbul's second-largest airport Sabiha Gokcen is seeking relief from its current contract after the pandemic hit and is close to reaching a deal with the Turkish government, a top company official said. ISG, the operator, is fully owned by Malaysia Airports Holdings and has a 20-year contract with the government to run Sabiha Gokcen airport until 2034. The contract was worth 1.93 billion euros ($2.01 billion). "We are discussing with the government some forms of relief due to the pandemic," Mohammad Nazli Abdul Aziz, executive director of the operator, ISG, told Reuters.
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Turkey's government is considering pushing a supplementary budget through parliament before a recess next month in order to cover possible summer payments and the rising costs of a lira slide and rampant inflation. Two sources told Reuters that work on the extra budget was being conducted, but no final decision has been made on whether it will be needed. The decision comes as President Tayyip Erdogan faces tough elections by mid-2023, and his approval ratings have been hit by 73% annual inflation that has sent food and gas prices soaring.
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Turkey aims to cap annual increases in home rentals at 25% as a surge in inflation pressures the government a year ahead of scheduled elections, Bloomberg News reported. Anger is deepening over soaring rents, which online marketplace sahibinden.com said rose an average 147% in Istanbul for new tenants who signed deals in May. Landlords are attempting to evict occupants and sign up new ones at much higher prices, with the number of lawsuits launched against tenants doubling, Sozcu newspaper reported in April.
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The Turkish lira plunged the most since a rout late last year, as a steep drawdown in the central bank’s reserves and its unorthodox monetary policy left the currency increasingly exposed amid a standoff with the country’s NATO allies, Bloomberg News reported. Already the worst performer in emerging markets this year, the lira on Tuesday is on track for the world’s biggest decline against the dollar, slipping as much as 1.5% to the weakest level in five months. Little relief is in sight, especially as energy costs spiral higher for Turkey.
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Turkey’s gross foreign-currency reserves fell the most this year, providing further evidence that an effort to support the lira is coming at an increasingly steep cost, Bloomberg News reported. The stockpile shrank by $4.8 billion in the seven days ended May 13, according to central bank figures published on Friday. That brought total holdings, which exclude gold reserves, to a 10-month low of $61.2 billion.
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Turkey's annual inflation jumped to a two-decade high of 69.97% in April, according to data on Thursday, fuelled by the Russia-Ukraine conflict and rising energy and commodity prices after last year's lira crash, Reuters reported. The surge in prices has badly strained households just over a year before presidential and parliamentary elections that could bring the curtain down on President Tayyip Erdogan's long rule.
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The Turkish lira was on Thursday unmoved by the central bank's decision to hold its policy rate at 14%, while Russia's rouble slipped ahead of planned easing in capital controls next week, Reuters reported. The lira was down 0.2% at 14.61 a dollar after the widely expected central bank move, which came even as annual inflation was estimated to rise beyond the current 61%. The increase in price pressures has been driven by rising energy costs and supply shocks, but inflation should start to ease due to the central bank's actions, it said.
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A company accused by German authorities of supplying authoritarian countries such as Turkey, Egypt and Myanmar with trojan software that could be used to eavesdrop on dissidents has shut down operations and filed for insolvency, the Bloomberg reported. FinFisher GmbH sold spyware to law enforcement and intelligence agencies that allows users to access address books, chat messages, photographs and videos on targeted smartphones as well as listen in on telephone conversations.
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