Turkish Lira is given a mild lift after the government announce to raise tax of foreign currency savings while scrapping tax on Lira savings. The decision was published in the Official Gazette today.
Withholding tax on foreign currency savings of up to six months was increased from current 18% to 20%. On the other hand, withholding tax on Lira savings of more than one year was lowered from 10% to 0%.
Lira was sold off this week on deepening worries on Turkish banks. Fitch warned that “Turkish banks are particularly exposed to refinancing risk, given their reliance on external funding.” Moody’s also said “there is a heightened risk of a downside funding scenario, where a deterioration in investor sentiment limits access to market funding.”
USD/TRY’s rebound has stalled now at 6.8396. Immediate threat of 7.0000 handle is eased.
