Central Bank issues FX rates for new scheme

Central Bank issues FX rates for new scheme

Central Bank issues FX rates for new scheme

The Turkish Central Bank on Dec. 23 released the first issuance of currency rates to be used as a basis for a new mechanism introduced to protect Turkish Lira deposit accounts against fluctuations in the exchange change markets.

According to bank data, the U.S. dollar/ lira exchange rate was 11.63 for buying and 11.66 for selling, while the rates were 13.18 and 13.21 for the euro, respectively. Exchange rates will be released by the bank every morning.

The lira’s value shot up around 40 percent against foreign currencies after President Recep Tayyip Erdoğan announced the new deposit account system along with other several financial measures to protect the lira’s value late on Dec. 20.

“In the event that resident real persons, who already had an FX deposit account or FX participation fund denominated in U.S. dollars, euros or British pounds by Dec. 20, convert their accounts into Turkish Lira time deposit accounts/participation funds, will be eligible to benefit from the incentive,” said the bank in a statement. Accounts will have maturities of three, six and 12 months, it added.

The interest/profit share that will be paid to lira deposit accounts/participation funds to be opened and the difference in exchange rates at the beginning and at end of the maturity will be compared, and the deposit and participation fund holder will be paid whichever is higher. Regardless of the exchange rate on the day the account is opened and the exchange rate at the end of the maturity, the principal and the interest/profit share will be paid to the client by the bank.

Meanwhile, in order to help export/import companies to manage exchange rate risk, lira-settled foreign exchange forward sales will be carried out at the Central Bank via auctions and at the BIST Derivatives Market (VIOP).

Turkey, Economy, fx rates,