Generated fears about the future of the Turkish banks and their liquidity in particular has led the Central Bank of the country to issue a written statement pledging to offer “all liquidity” they will be needing.
“In the framework of intraday and overnight standing facilities, the Central Bank will provide all the liquidity the banks need. Banks will be able to borrow foreign exchange deposits in one-month maturity in addition to one-week maturity.”
If need be, Central Bank “may increase lenders’ current foreign exchange deposit limits — $50 billion — and improve utilization conditions”, Hurriyet Daily reported citing Turkey’s top financial institutions’ statement that added the Central Bank has revised discount rates for collaterals against Turkish lira transactions.
“Through this regulation, the discounted value of banks’ current unencumbered collaterals is projected to increase by approximately 3.8 billion Turkish liras ($555.4 million).”
Moreover, it raised foreign exchange deposit limits for lira transactions of lenders from €7.2 billion ($8.2 billion) to €20 billion ($22.8 billion) and lowered Turkish lira reserve requirement ratios by 250 basis points for all maturity brackets, and reserve requirement ratios for non-core FX liabilities by 400 basis points for up to three-year maturities, said the website, citing the Central Bank’s statement.
According to the country’s Treasury and Finance Minister Berat Albayrak the action plan effective Aug. 13 (earlier than initially planned) is destined to support the plunging Turkish Lira and soothe market concerns…. / IBNA