Turkey raises reserves for FX-protected lira deposits

Turkey raises reserves for FX-protected lira deposits
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Turkish Central Bank hiked required reserves to safeguard FX-protected lira deposits, taking steps to bolster the currency and protect the nation's financial stability.

Turkish central bank announced a hike in required reserves for foreign exchange (FX)-protected lira deposits. The decision, detailed in the Official Gazette and disclosed on Thursday, marks a proactive step to address the ongoing financial challenges faced by Turkey.

The central bank has increased the required reserves for FX-protected lira deposits with maturities of up to six months from the existing 25% to 30%, as indicated in the gazette. This strategic decision is intended to bolster the Turkish lira and ensure its protection during a time of economic uncertainty.

Furthermore, for accounts with maturities of up to one year, the required reserves ratio has been raised from 5% to 10%, a decision that underscores the central bank's commitment to maintaining stability and safeguarding the financial interests of the country. These changes in required reserves for lira deposits come after the central bank introduced such requirements for all FX-protected lira deposits in July, marking a shift in policy to counter economic volatility.

In addition to these measures, the central bank also increased the required reserves ratio for foreign currency deposits by 1 percentage point across different maturity brackets. These steps indicate a concerted effort to protect the Turkish economy against external economic shocks and to ensure the resilience of the financial system.