The Turkish Central Bank has increased F/X reserve requirements ratios by 300 basis points to partially correct the reduction of 500 basis points introduced at the onset of the coronavirus pandemic.
The Bank published the following press release on its website regarding the increase in F/X reserve requirement ratios:
Within the context of the measures announced on 17 March 2020 to contain the adverse effects of the coronavirus (Covid-19) pandemic, FX reserve requirement ratios were reduced by 500 basis points for banks that met real credit growth conditions, and USD 5.1 billion of liquidity was released. Additionally, banks that met real credit growth conditions for the first time were provided with approximately USD 9.2 billion of liquidity, and thus, a total amount of USD 14.3 billion of liquidity was provided to the banking system.
This time, as part of the normalization process, in order to support financial stability, the CBRT has decided to increase FX reserve requirement ratios by 300 basis points in all liability types and maturity brackets for all banks.
As a result of this decision, approximately USD 9.2 billion of FX and gold liquidity is expected to be withdrawn from the market.
The aforementioned change will take effect from the calculation date of 10 July 2020 with the maintenance period starting on 24 July 2020.”