Turkish Lira

FxPro Halts Turkish Lira Trades as The Currency Nosedives

FxPro has introduced fresh restriction measures for Turkish lira related transactions. Namely, it has stopped accepting new orders for the Turkish currency pairs as of today, with the timing of reopening still undecided.

The decision involves EUR/TRY (Euro/Turkish lira) and USD/TRY (US dollar/Turkish lira) and only settlement orders that reduce or close existing positions on these pairings can be traded by FxPro customers.

“Trading on Turkish Lira pairs (USDTRY & EURTRY) is temporarily set to close-only, meaning that you are unable to open new positions for the time being. You can still close any currently open positions, and the pairs will be available for placing orders again as soon as possible. Thank you for your patience and understanding,” FxPro said on its website.

This is not the first time FxPro notified its clients that TRY pairs have been placed under trading limitations. On previous occasions, the CySEC and FCA regulated brokerage transferred TRY pairs to close only mode on MT4 and MT5 accounts while had been completely disabled on cTrader.

The Turkish lira hit new lows against the US dollar and euro, at 12.73 and 14.31, respectively. The currency, by far the worst performing emerging market asset this year, lost nearly 20% of its value this week while shedding15% at one point just yesterday.

Analysts place the blame on irresponsible monetary easing policy and low interest rates championed by Turkish President Recep Tayyip Erdogan as part of an “economic war of independence.” Erdogan has applied political pressure to the country’s central bank, rejecting pleas from investors and economists to change course.

Turkish media reported that authorities are investigating possible violations in foreign-exchange, deposit, credit, and brokerage services. The banking regulator seems convinced that offshore trade is the driver of lira speculation and has specifically blamed some financial institutions for taking manipulative positions against the lira.

Turkey’s currency saw wild moves throughout last year as investors fretted about a lack of reserves to protect the economy from the coronavirus impact. At the time, trading desks at global banks, including BNP Paribas, decided to suspend Turkish lira transactions over its FX prime brokerage units as the collapse spread to other emerging market currencies.

Prime brokers often come under scrutiny during any financial crisis as their capital-intensive business inflates balance sheets since they finance their clients’ transactions by extending credit.