Turkish Central Bank Tightens Screws on Cheap Lira Window Abroad

Turkey’s central bank raised the reserve requirement ratios on banks’ short term liabilities abroad in a bid to discourage local banks from seeking cheap lira from offshore markets.

The bank early Saturday raised the reserve requirement ratio to 18% for maturities as long as 1 month in lira-denominated funds from repo transactions and loans obtained from abroad, and to 14% for maturities as long as 3 months. Previously, the reserve requirement ratio was 12% for maturities of as long as 1 year for repo transactions and loans abroad.