May 7, 2020 / 9:24 AM / a month ago

Turkish regulators probe alleged currency manipulation by London-based institutions-Anadolu

ISTANBUL, May 7 (Reuters) - Turkish regulators have launched legal action against London-based financial institutions over allegations they bought large sums of foreign currency and then defaulted on Turkish lira liabilities to weaken the currency, state-run Anadolu news agency said on Thursday.

Anadolu did not specify which regulatory bodies had launched the action and did not name any banks or institutions facing the allegations.

The report followed a sharp selloff in the lira, which has fallen in five consecutive trading sessions and weakened to a record low of 7.25 against the U.S. dollar on Thursday.

Turkey’s central bank did not respond to a request for comment. There was no immediate comment from financial authorities in London.

It is not the first time state media have blamed the lira’s volatility on foreign attacks. Such accusations were made during a 2018 currency crisis that wiped out some 30% of its value, and Anadolu said a similar incident happened in March 2019.

Anadolu, citing banking sources, said London-based financial institutions had mounted a “manipulative attack” against the Turkish lira, after trying to rapidly buy large sums of foreign currency with Turkish lira they did not have.

“It has been learned that regulatory authorities, which have identified the transactions in question, have taken legal action and launched proceedings, and that the foreign banks could face severe penalties and transaction bans,” Anadolu said.

The financial institutions were unable to fulfil their lira liabilities despite an extension to the closing time of the central bank’s EFT system, Anadolu also said.

It said the “attack” coincided with a conference call on Wednesday between Turkish Finance Minister Berat Albayrak and investors, in which he mounted a defence of Ankara’s policies. (Writing by Ezgi Erkoyun and Tuvan Gumrukcu, Editing by Timothy Heritage)

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