Turkey Brings Back Interbank Borrowing Limit as Stress Eases
- Central bank tightens policy after unrestricted funding period
- As bank run concern eases, investors still call for rate rise
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Turkey’s central bank reintroduced borrowing limits for overnight transactions at its interbank money market, effectively tightening liquidity after a two-week period of unrestricted funding that aimed to contain stress from the nation’s currency crisis.
The central bank said Wednesday that “recent evaluations” prompted the move to reintroduce an overnight borrowing limit, which will be set at 44 billion liras ($6.9 billion). That’s still a looser limit for Turkey’s embattled banks than the 22-billion-lira threshold in force before Aug. 13, when the unrestricted funding was announced as part of a swath of steps announced amid a plunge in the lira.