Turkish lira's decline a "strong signal" of move towards free market -traders

The decline in the Turkish central bank's reserves has stopped as the lira's sharp fall against the dollar on Wednesday gives a "strong signal" that Ankara is moving away from state controls to a freely-traded currency, traders said. The Turkish central bank's net international reserves touched a record low of negative $4.4 billion last month, after years of interventions to keep the lira stable.

The decline in the Turkish central bank's reserves has stopped as the lira's sharp fall against the dollar on Wednesday gives a "strong signal" that Ankara is moving away from state controls to a freely-traded currency, traders said. The central bank's reserves could enter an upward trend but the payments for a government scheme that protects lira deposits against forex depreciation pose the greatest threat, they said.

The lira dropped as much as 7% on Wednesday, touching a record low of 23.16 against the dollar. It has shed more than 19% this year, sharpening its decline since President Tayyip Erdogan was elected for a third term last month. The Turkish central bank's net international reserves touched a record low of negative $4.4 billion last month, after years of interventions to keep the lira stable.