Turkish lira firms slightly as investors weigh forex move

ISTANBUL, May 21 (Reuters) - The lira firmed slightly on Tuesday after Turkey’s banking watchdog imposed a settlement delay for FX purchases by individuals of more than $100,000, in a move which bankers said could raise concerns about capital controls.

At 0705 GMT, the lira stood at 6.0240 against the U.S. currency, compared with a close of 6.0315 on Monday.

A currency crisis last year wiped nearly 30% off the lira’s value against the dollar. It has lost some 12% this year on concerns over ties with Washington and a re-run of Istanbul mayoral elections next month.

A BDDK watchdog letter sent to banks on Monday said the settlement date for FX purchases by individuals of more than $100,000 - or equivalent in other currencies - will be the following day.

“Not a particularly encouraging sign - people will worry that this is beginning down the road towards capital controls,” said Timothy Ash, head of emerging market research at Blue Bay Asset Management.

Beste Naz Sullu, of Gedik Investment, said: “There are efforts to take some steps that will block speculative forex demand. Yesterday the BDDK took such a move. But the market does not like measures such as this much.”

Authorities have recently taken unorthodox steps to protect the currency, including state banks selling dollars. Ankara also raised a tax on some foreign exchange sales to 0.1% from zero last week to discourage Turks converting savings to foreign currencies.

The latest move, effective from Tuesday, is aimed at “contributing to the stable operation of financial markets and the effective operation of the loan system and the prevention of potential speculative transactions”, the BDDK letter said.

Turks have flocked to foreign currencies in the months since last year’s crisis hit its peak in August, when the lira fell as much as 42% against the dollar. (Additional reporting by Behiye Selin Taner; Writing by Daren Butler; Editing by Jonathan Spicer)