Reports of Turkish banks withholding lira liquidity from foreign banks not true: Official

Reports that the Turkish lira's swap rates are surging due to Turkish banks withholding lira liquidity from foreign banks are not true, the head of Turkey's banking association told Reuters on Wednesday. Earlier on Wednesday, sources told Reuters that Turkey would keep directing its banks to withhold lira liquidity from a key foreign market at least until after local elections on Sunday.

In a statement to Reuters, Huseyin Aydin said the reason behind the rise in lira swap rates was that there was not enough lira for foreign banks to buy dollars, and added that Turkey had shown the necessary stance against a speculative attack on the lira. Aydin said Turkish banks were not sources of liquidity, but rather they were looking for themselves. He said decisions by banks on liquidity were business-based and in line with international laws and regulation.