(Bloomberg) -- As Turkey slept, its banks were selling dollars and buying lira in Asia to give maximum impact to their purchases.
The market was caught off guard by the transactions, according to two traders in Asia who asked not to named because they're not authorized to speak publicly.
The sales triggered the lira's biggest gain in more than a month, sending it up more than 2%. That pared only some of this year's losses -- it has weakened 13 of the past 14 weeks against the dollar -- amid the prospect of extended political uncertainty. The country is preparing for a rerun of a municipal vote in Istanbul after President Recep Tayyip Erdogan's ruling AK Party lost the original election by a narrow margin.
The Turkish banks were selling dollars in exchange for liras below the prevailing market bids, one of the traders said. The currency was trading 1.2% stronger against the dollar at 6.1207 as of 10:43 a.m. in Istanbul. It has weakened almost 10% since the end of March, the biggest depreciation for any currency tracked by Bloomberg.
On Tuesday, three people with knowledge of the transactions said government-run banks sold as much as $1 billion over the 24 hours that followed the High Election Board's decision to re-run municipal elections. Erdogan's AK Party had demanded the revote, alleging it was tainted by irregularities.
--With assistance from Stephen Spratt.
To contact the reporter on this story: Michael G. Wilson in Sydney at mwilson176@bloomberg.net
To contact the editors responsible for this story: Onur Ant at oant@bloomberg.net, ;Dana El Baltaji at delbaltaji@bloomberg.net, Constantine Courcoulas, James Hertling
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