Turkey probes JPMorgan over threat against lira

ISTANBUL • Turkey’s banking and capital markets regulators opened separate investigations into JPMorgan Chase & Co after two analysts recommended investors go long on the dollar against the lira on a day when the currency lost more than 5%.

The Banking Regulation and Supervision Board said the JPMorgan analysts’ note had “misguiding and manipulative” content that resulted in volatility in markets and hurt the reputation of Turkish banks, according to state news agency Anadolu. The Capital Markets Board began its own investigation on similar grounds, according to a statement on its website.

Disclosure of the two probes broke almost simultaneously, suggesting coordination between the regulators a day after the lira had its worst performance since last year’s crash. At one point last Friday, the currency was trading more than 6.5% lower against the dollar, leading retreats among emerging-market peers. Turkey’s central bank was forced to announce a surprise tightening of monetary policy in a bid to stem the lira’s slump, but it hardly changed the currency’s trajectory.

JPMorgan recommended investors go short on the lira, targeting a move to 5.90 against the greenback, citing a recent drop in Turkey’s net foreign-exchange (forex) reserves for the move. The pace at which Turkey’s forex holdings were dropping was unsustainable, the note said.

The banking regulator began another investigation against banks that manipulated their own clients to buy foreign currencies without naming the financial institutions that are targeted, reported Anadolu. — Bloomberg