The Turkish lira rises 6% against the dollar after restrictions on lending

The Turkish lira jumped 6 percent against the dollar on Monday after Turkey moved to limit lira lending to many companies with more than $1 million in foreign currency cash, the latest move to stem the currency’s slide.

The lira jumped to 16.099 against the dollar, after closing on Friday at 16.99.

After most domestic markets were closed on Friday, Turkey’s Banking Regulation and Supervision Authority announced that companies with foreign cash assets of more than 15 million liras ($908,000) and foreign exchange assets exceeding ten percent of total annual assets or revenue will not be allowed to obtain New loans in pounds.

Analysts had expected that this step would support the lira, as it would force many large and medium-sized companies to convert their foreign currency assets into the lira to maintain their ability to open credits.

The new measure is the latest in a raft of measures taken by the government and central bank since the currency’s historic collapse in December sent inflation soaring. The Banking Regulatory and Supervisory Authority confirmed that this step would enhance financial stability.

The lira lost 44% of its value against the dollar last year after a series of interest rate cuts, despite high inflation, which reached 73.5 percent in May. This year, the lira is still 18 percent weaker, despite Monday’s gains.

The lira is still under pressure due to policy concerns, the depletion of official reserves, the high current account deficit, as well as the fears of some investors and savers about imposing capital controls.