The Turkish lira slid towards an all-time low against the US dollar on Wednesday as the country’s finance minister used a rare call with foreign investors to insist that the country would rapidly recover from the economic effects of coronavirus.

The lira was down as much as 1.6 per cent against the US dollar to TL7.19 after a presentation to foreign investors by Berat Albayrak, putting it close to its 2018 intraday nadir of TL7.2362.

The call, which was joined by more than 2,000 attendees, came a day after Turkey’s banking regulator moved to curb currency speculation by making it harder for foreign investors to obtain lira.

Mr Albayrak, who is the son-in-law of president Recep Tayyip Erdogan, insisted that Turkey’s gross domestic product would increase in 2020, according to four people who were on the call, rejecting predictions by the IMF and others that the country would suffer a deep recession as a result of the Covid-19 pandemic.

The minister said that Turkey was well placed to withstand a squeeze on global financing conditions, and denied that the country was engaged in a battle to prevent the lira from depreciating — a broadly held view among investors and economists. Mr Albayrak said that Turkey was not targeting a specific level for its currency, but stepped in only when necessary to ensure financial stability.

Traders say that state banks have sold billions of dollars in the open market on behalf of the central bank over the past year in an attempt to prop up the lira, a move that has taken a toll on the country’s foreign exchange reserves.

The effort, they say, has intensified in recent weeks as the coronavirus pandemic has put pressure on emerging market currencies and shone a spotlight on countries such as Turkey that have large foreign financing needs and are seen as vulnerable to a squeeze on funding.

Meanwhile, authorities have imposed measures aimed at making it more difficult for foreign investors to bet that the currency will fall. The banking regulator has repeatedly lowered the limit on the volume of currency swaps and other similar transactions that Turkish banks can perform with foreign counterparties.

Late on Tuesday, the banking regulator announced new curbs that limit certain Turkish banks’ lira-denominated transactions with foreign banks — including repo transactions, deposit facilities and loans — to 0.5 per cent of their equity. Such measures should make it harder still for foreign investors to obtain lira.

At the same time, the central bank raised the limits on foreign currency swaps that could be performed with Turkish banks, according to local media reports. That prompted speculation that the central bank could be preparing to increase its use of borrowed money to bolster its reserves.

Mr Albayrak insisted that Turkey’s gross reserves were sufficient. The country’s reserves, including gold, have plunged by almost $19bn this year to $86bn.

He added that discussions with international central banks about arranging swap lines to provide Turkey with foreign currency were ongoing.

“I don’t think the lira is an outlier this time around given its external vulnerabilities,” said Emre Akcakmak, a Dubai-based portfolio manager at East Capital, an asset manager specialising in emerging markets.

“I think that every weak, insufficient or inappropriate step taken by policymakers is fuelling daily panic at a time when emerging currencies are under pressure,” he said.

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