(Adds analyst comment, lira)
By Daren Butler
ISTANBUL, March 9 (Reuters) - The Turkish Central Bank said on Monday it was resuming foreign exchange-selling auctions from Tuesday and may intervene directly in the market if excessive volatility continues during a sharp economic slowdown.
The bank action came as the Turkish lira
The bank said the forex auctions would have a daily volume
of $50 million but this may increase on days when necessary. The
volume of the auction will be announced at 1:30 pm (1130 GMT)
daily on the Reuters page
"The decision was taken to provide foreign currency liquidity to the market via foreign exchange-selling auctions from March 10, 2009 so that the foreign exchange market functions in a healthy fashion," the central bank said.
"In the case that excessive volatility is observed in exchange rates the Central Bank may intervene directly in selling foreign currency," the statement added.
The bank last held two foreign currency-selling auctions in October before halting them due to easing concerns about liquidity in the foreign exchange market.
"This is a strong signal on the central bank's dissatisfaction about the lira weakness," said JP Morgan economist Yarkin Cebeci.
"The auctions and especially the probability of direct interventions should make it harder to bet against the lira in the short term," he said.
Analysts also say that it is key for a recovery for the government to agree an International Monetary Fund loan deal, having been unable to overcome differences in talks until now.
Prime Minister Tayyip Erdogan said on Monday Turkey would only sign a deal with the IMF if the global lender presents conditions acceptable to Turkey. Turkey's previous $10 billion IMF accord expired in May.
Monday's lira weakness was driven by poor industrial output data which showed production slid by 21.3 percent in January, reinforcing expectations of a sharp economic slowdown.
The lira has lost some 16 percent in value against the dollar this year, in addition to a 25 percent decline last year.
(Editing by Ron Askew)