«In the narrow arched alleyways where shopkeepers have plied their trade for more than half a millennium, Erdogan’s last-ditch efforts to smother bets against the lira don’t have the same bite,» Bloomberg has observed.
While authorities in Turkey introduce new rules to restrict foreign currency transactions by banks in moves to counter growing demand for reserve currencies and prevent further depreciation of the local currency, exchange bureaus at Istanbul’s 600-year old Grand Bazaar have constituted a refuge for currency traders seeking to escape the reach of the government, and among major buyers is state-owned crude oil and natural gas pipelines company BOTAS, Bloomberg said.
It was recently claimed that the Turkish Central Bank itself has started buying US dollars at the Grand Bazaar on a regular basis, but the claim was quickly denied by the bank’s officials.
«In the narrow arched alleyways where shopkeepers have plied their trade for more than half a millennium, Erdogan’s last-ditch efforts to smother bets against the lira don’t have the same bite (…) Foreign-currency transactions at the bazaar are legal and largely unregistered, making it difficult to estimate daily turnover. But exchange bureaus say business is booming, mostly due to corporate clients,» Bloomberg more recently said, adding:
«Massive four-wheeled safe boxes make their way through the Grand Bazaar accompanied by security guards, carrying what tenants say are dollars for major firms including state-run energy importer BOTAS, the market’s biggest buyer of foreign exchange.»
The restrictions imposed on local banks by the government have created a widening gap between foreign currency rates at the banks and the Grand Bazaar’s exchange bureaus.
«The opportunity to buy and sell dollars outside restrictions placed on the banks comes at a price. The greenback is available at the Grand Bazaar at a more than 5.2% premium to the interbank rate,» Bloomberg observed.
