Central Bank hikes two reserve requirement ratios

ANKARA

The Central Bank has made changes to the reserve requirement ratios for short-term Turkish Lira-denominated funding obtained from abroad.

“The reserve requirement ratio, which was 12 percent for maturities up to one year for lira-denominated funds from repo transactions abroad, has been differentiated across maturities and loans obtained from abroad,” the bank said in a statement.

Accordingly, the reserve requirement ratio was raised to 8 percent for maturities up to one month, and to 14 percent for maturities up to three months.

The changes in the reserve requirement ratios were made in order to strengthen macro-financial stability and the monetary transmission mechanism, the bank said.

Earlier this month, the bank raised the reserve requirement ratios for FX deposits by 200 basis points across all maturities, and the minimum share of export proceeds to be sold to the bank was set at 35 percent until July 31.

Also, the remuneration rate applied to required reserves maintained for lira deposits has been raised from 84 percent to 86 percent of the bank’s weighted average funding cost.

The monetary transmission mechanism is strengthened and risks to the central bank's balance sheet are mitigated, Governor Fatih Karahan said during a presentation of the bank’s inflation report on May 22.

It is crucial that consumer loans follow a course that supports the rebalancing in domestic demand, Karahan said, adding that lira commercial loan growth is in line with monthly growth limits and loan demand.