Turkey’s Banking Regulation and Supervision Agency (BDDK) announced on the weekend that an investigation was launched into the US investment bank JPMorgan over a report released last week. Turkey claims the report was misleading and manipulative, causing volatility in financial markets and in particular loss of reputation value of Turkish banks.
Referring to the sudden drop in the central bank’s foreign currency reserves, the report said that the rate of the fall in foreign exchange reserves of Turkey was unsustainable. The two analysts claimed, in the report, that reserve support provided by the central bank could fall after this Sunday’s local elections and recommended that investors short the lira against the dollar.
BDDK also announced that it has launched investigations into several banks engaging in 'manipulative' activities. In the statement made by the institution, it is stated that "In recent years, we have been receiving many complaints saying that some banks have been leading the customers to purchase foreign exchange in a manipulative way. Our institution has launched investigations on the subject and necessary administrative and legal processes will be carried out".
After the banking regulator BDDK's announcement, Turkey’s Capital Markets Board (SPK) also announced that it was also opening an investigation because the report had a speculative effect on the stock exchange markets.
During his campaign rally in Istanbul on Sunday, Turkish President Erdoğan targeted the financial sector, saying “If you get involved in provocative acts, saying ‘foreign currencies will strengthen, this will happen, that will happen’, you will pay a very heavy price... The BRSA has taken some steps. I will make you pay a very heavy price.”