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Turkish Central Bank Offers Support to Foreign Currency Converting Firms

The Central Bank of Turkey announced that it would support foreign currency conversion to companies that bring in foreign currency from abroad. This includes exporters and tourism firms.

Turkish Central Bank
Turkish Central Bank

Firms that pledge not to buy foreign currency for a period determined by the bank and deposit the remaining amount to conversion accounts will benefit from a 2% discount as conversion support when converting foreign currency from abroad. This is part of a scheme to protect lira deposits against forex depreciation.

Central Bank Governor Addresses Criticism

Analysts have expressed concern that this practice could create a separate FX conversion rate to the trading rate in the free market. However, Central Bank Governor Sahap Kavcioglu dismissed this criticism, stating, "We don't have a dual foreign exchange rate. We are just encouraging foreign currency resources from abroad." He added that "there is no different foreign exchange rate application in Turkey. The FX rates at the banks are the same to the exporters."

Liraization Strategy and Stable Forex Rates

The central bank has taken several measures as part of its liraization strategy to revive interest in the currency. This includes stability in the last several month's thanks partly to indirect forex sales to the market. These steps helped reduce the share of foreign currencies to around 46% of total bank deposits compared to some 65% a year ago. The latest steps are expected to ensure a stable course in foreign exchange rates.