TURKEY: State Lenders Reportedly Sold $5bln to Support Lira

"Turkish state lenders sold an estimated $5 billion to support the lira on Tuesday and Wednesday in an effort to stem a selloff sparked by a court ruling targeting senior opposition figures. The state-owned banks sold most of that amount on Tuesday, according to traders familiar with the sales who asked not to be named, citing company policy." (BBG)

• For reference, FX intervention following the political turmoil in March is estimated to have amounted to around $50bln.
• Of the few sell-side notes we have seen so far, the most recent episode of turmoil is unlikely to alter the CBRT’s easing plans too significantly. A rate cut of around 200-300bps is still expected next week. However, the more significant court ruling scheduled for September 15 – which could see CHP chairman Ozgur Ozel removed from his seat – could complicate matters.
• Note too that the central bank made equal adjustments to the upper and lower rates of its interest rate corridor last month, thereby maintaining the 300bp gap between the overnight lending rate (46%) and the policy rate (43%). This provides policymakers with the flexibility to tighten conditions by shifting funding across windows – which was demonstrated earlier this year.