NEWS Finance        12/08/2020

Turkish Central Bank negates open market liquidity limits

The Turkish Central Bank, on August 11th, announced that it had decided to erase liquidity limits offered to primary dealers for open market operations, effective as of August 12th. This measure aims to tighten liquidity by reducing the supply of cheap funding. Last Friday, the bank had cut liquidity limits by half following pressure on the Turkish lira which surpassed TL 7.30 to the US dollar. It is now expected that Turkey’s effective interest rates will surpass the Bank’s policy rate of 8.25% and likely reach the upper corridor level of 9.75%. This action by the Central Bank is part of its back-door strategy to protect the Turkish lira without raising the policy interest rate of 8.25%, a development which would be politically unacceptable given the Turkish President Recep Tayyip Erdoğan’s determination to keep interest rates low no matter what in order to boost growth.

 

The Turkish banks reacted immediately by raising their Turkish lira time deposit interest rates by some 4 points to around 11%. In light of the official inflation rate in July being 11.76%, the real income from TL time deposits is still negative, being below inflation. The interest rates on 32 day time deposits accounts, the most preferred by customers, rose from between 7% and 8%  to between 10.50% and 11%.

 



Turkey’s net minimum wage has been raised 21.56% to TL 2,825.90 (USD 380) as of 01.01.2021       Migration communication helpline 157 available for foreigners in Turkey       Read our homepage articles on developments in the Turkish economy       Turkey’s official annual inflation rate increases to 19.25% in August 2021       Turkey’s official unemployment rate shoots back up to 12% in July 2021       Read our BUSINESS section for latest sectoral and corporate news       Turkey’s population is 83,614,362 as of 2020 yearend       Foreigners visiting Turkey in 2020 falls by 71.7% to 12.7 million       Turkey’s private sector foreign debt is USD 173.9 billion as of 2020 yearend       Turkey’s economy grew by 1.8% in 2020       Foreign Direct Investment inflow to Turkey was USD 7.7 billion in 2020