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Turkey’s Ban on Lira Loans to Some Firms Triggers Rally

Exchange rates at a currency exchange in Istanbul on June 24. — Exchange rates at a currency exchange in Istanbul on June 24.
Photographer: Erhan Demirtas/Bloomberg

By

Kerim Karakaya,

Asli Kandemir, and

June 24, 2022, 6:03 PM UTCUpdated onJune 25, 2022, 10:37 AM UTC

Turkey stepped up efforts to bolster the lira and cool lending with a surprise measure that bans loans to companies deemed to be flush with foreign-exchange cash, sending the domestic currency on its biggest rally this year.

The country’s banking regulator is restricting commercial lira loans to corporate borrowers if they hold more than 15 million liras ($890,000) in foreign-currencies and if the amount exceeds 10% of total assets or annual sales. The authority, known as BDDK, announced the decision on Friday.