The Turkish Central Bank began dollar sale auctions and YTL purchase auctions on Monday after the bank's Monetary Policy Committee met on Sunday to review interest policies and decided to implement a strong fiscal tightening, it said in a statement.
Reiterating its commitment to the floating exchange rate regime, the central bank said it would not shy away from direct foreign exchange market intervention if necessary.
"The central bank will not be insensitive to excessive volatility... and will provide foreign exchange liquidity through tenders when it sees unhealthy price levels," it said.
First auctions:
In the first auctions of this kind, the bank withdrew YTL 500 million ($294 million) from the market, the maximum amount which it had set under the new policy instrument.
It withdrew YTL 398 million in a tender with a one-week maturity at a maximum rate of 18.5 percent after receiving bids of YTL 1.199 billion.
In a second tender with a two-week maturity it withdrew YTL 102 million at a maximum rate of 18.9 percent after bids totaled YTL 357 million.
The new policy regulations said auctions would have one-week and two-week maturities and their volume would not exceed YTL 500 million. The first two will mature on July 3 and July 10.
The lira, which has lost almost a quarter of its value since the end of April, closed at 1.7085 on Friday.
Sunday's central bank hike took the overnight borrowing rate to 17.25% from 15% and the lending rate to 20.25%.
