Turkey's central bank opened a $300 million forex depo auction with a one-week maturity on Friday, a move bankers have said was effectively a form of a swap transaction and aimed at shoring up the lira currency.
Interest rates in the auction were at 9.0 percent for the lira, up from 8.5 percent a day earlier, and 0.75 percent for the dollar, data from the central bank showed.
Central Bank's new swap mechanism was praised by economists who said the move will contribute towards making lira more stable. The lira has lost 20 percent of its value against the greenback since November last year.
The swap mechanism, in which the banks lend liras to the Central Bank while borrowing dollars to pay at a due date with predetermined interest rate, is expected to cut down the lira's liquidity and boost the Turkish currency as the cost of borrowing from banks in the local currency increases.
