ISTANBUL, April 4 (Reuters) - Turkey's central bank made record purchases of government bonds last week to stem fallout from the coronavirus outbreak that has pushed the economy to the brink of its second recession in less than two years.
The buying spree, which totalled nearly 10 billion lira ($1.5 billion), came as Goldman Sachs predicted that the Middle East's largest economy would contract by about 5% this year -- perhaps the most dire of several recently downgraded forecasts.
Turkey has more than 20,000 confirmed cases of the new coronavirus, putting it ninth globally after a surge in recent weeks, with 425 deaths. (Click here for the global spread.)
The government has restricted much social movement and promised $15 billion in economic support. Based on asset holdings data, the central bank has made good on its promise to ramp up its so-called quantitative easing (QE).
The bank bought about 9.3 billion lira in government bonds in the secondary market last week including some 5 billion lira from the Unemployment Insurance Fund, according to the data and traders.
The highest recorded weekly purchases aim to backstop fiscal spending and bolster the insurance fund, which is expected to be aggressively tapped. Turkey's main opposition party says there are already more than two million people out of work due to measures to stop the coronavirus spreading.
In the latest steps, President Tayyip Erdogan on Friday imposed a stay-at-home order for the under-20s and closed off the borders of 31 cities, including Istanbul, to vehicles. Turkish Airlines THYAO.IS cancelled domestic flights through April 20.
The Turkish lira TRYTOM=D3 has shed 11% versus the dollar this year and ended the week at 6.741, its weakest since the height of a currency crisis in August 2018 that tipped the economy into a brief but sharp recession.
Click here for a graphic of the global spread of the coronavirus https://graphics.reuters.com/CHINA-HEALTH-MAP/0100B59S39E/index.html
(Reporting by Nevzat Devranoglu and Jonathan Spicer Additional reporting by Irem Koca Editing by Helen Popper)
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