(Bloomberg) -- Turkish state lenders sold between $1 billion and $1.5 billion to stem the lira's decline on Friday, according to three people with knowledge of the matter.
The sales appear to have been triggered by a global flight from riskier assets as tensions between the U.S. and Iran escalated, two of the people said.
The lira slipped as much as 0.4% amid the rout to a seven-month low of 5.9781 against the dollar, posting one of the smallest declines across emerging-market currencies.
State banks have sold dollars to prop up the lira over the last year, especially in times of heightened volatility, traders say. The currency is a key economic barometer for voters and a driver of consumer confidence.
But the practice has been a source of controversy, with speculation mounting the sales amount to veiled intervention by the central bank. It’s also made trading the lira less attractive for foreign investors.
In the run-up to municipal elections in March, state banks sold as much as $15 billion to support the currency, according to traders’ estimates. In the second week of October, transactions amounted to at least $3.5 billion amid fears that punitive measures from Washington could deal a fresh blow to the Turkish economy.