April 1, 2019 / 12:43 PM / 6 months ago

London lira overnight swap rate jumps to 400 pct

LONDON, April 1 (Reuters) - The Turkish lira overnight swap rate in London soared to 400 percent after trading at around 200 percent earlier on Monday and a close of 23.75 percent on Friday, according to Refinitiv Eikon data.

London lira overnight rates had come into focus last week after rocketing to 1,200 percent on Wednesday as the currency came under pressure in the run up to Sunday’s local elections.

Last week’s rises had come after Turkish banks withheld lira liquidity from London markets to help shore up the pressured currency by keeping lira swap market transactions well below the banking watchdog limit of 25 percent, according to sources.

“A spike like that (one today) would suggest that liquidity is still very, very tight and that this is not a normally functioning market,” said Rabobank FX strategist Piotr Matys.

Reporting by Karin Strohecker, editing by Mike Dolan

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