Central Bank Makes Foreign Currency Warning to Banks

The Central Bank of the Republic of Turkey has warned banks to avoid any activity that may create a demand for foreign currency and to increase their efforts to shift from regular foreign currency to TL up to 5% for each month in newly introduced deposits.
In the meeting held by the Central Bank of the Central Bank (CBRT) with the market and in the face-to-face meetings, information was given about the things to be done before and after the new targets, which include a monthly conversion from the foreign currency that it put into practice. Requests from the banking sector to avoid activities that will create a demand for foreign currency and to focus on the implementation of the transition from foreign currency to Turkish Lira are conveyed.
It is stated that almost all of the applications made in the sector are very close to or above the newly determined 60% rate, but despite this, banks have a monthly conversion obligation.
The CBRT warns that if the demand formation in the foreign exchange market is not prevented, its actions will not be worthwhile and that it avoids practices that will indirectly create foreign exchange demand by circumventing the regulations, and not creating an obstacle in foreign exchange policy by creating foreign exchange demand.
Although the CBRT's need for foreign exchange created by import payments is met with export foreign exchange revenues, it is stated that local foreign exchange demand is limited by numerous regulations, and it is stated that it uses a penalizing method for its banks by obliging the sector to purchase Treasury bonds with an interest rate below inflation.
It is stated that the amount of long-term low-interest Treasury bonds held by the sector as a legal obligation has reached the level of 350 billion TL and they have started to conduct stress tests against interest and exchange rate readings that may occur after the election.