Turkey’s central bank again cuts reserve requirements to boost liquidity

By bne IntelliNews September 6, 2016

Turkey’s central bank cut reserve requirement ratios for the third time since July’s failed coup attempt as part of moves to boost liquidity, the bank said on September 6.

The changes could provide up to TRY1.2bn (€366mn) and $670mn of liquidity to the financial system if banks adopt the new ratios. Lira reserve requirement ratios were lowered by 50 basis points. The change means that banks now will be required to keep 11% of their lira liabilities of up to a year’s maturity on hand to cover for potential losses, a decrease from 11.5% previously.

The bank also said it is adjusting reserve option coefficients for some of its foreign exchange and gold facilities. “In the context of Reserve Options Mechanism, coefficients for the second, third and fourth tranches of the FX facility and for the first three tranches of the gold facility have been increased by 0.1,” the bank said in a statement on its website.

Following the better-than-expected August inflation data, analysts now expect further easing from the central bank, which has been under pressure from politicians to cut rates to stimulate economic activity and boost domestic demand. The bank last month cut its overnight lending rate for the sixth month in a row. The next rate-setting meeting will take place on September 22.

In a separate statement on September 6, the bank pointed to a decline in unprocessed food prices as the main reason behind the fall in August inflation. Unprocessed food prices were down 4.4% m/m, while fresh fruit and vegetable prices fell by 11.5% m/m in August.

Related Articles

Ankara bans all "protests" after dark, includes press events and group singing

Ankara has banned all "acts of protest" after dark. The wide-ranging ban, announced on May 26, even forbids press events, group singing and the shouting of slogans in public places after ... more

Richest Turkish families sell conglomerate shares for more than €500mn

Members of families that own Turkey’s two biggest groups of companies sold stakes in their respective groups for a combined sum of more than €500mn as the benchmark Turkish stock exchange index ... more

Turkey's Erdogan renews attack on high interest rates as tool of exploitation

Turkey’s President Recep Tayyip Erdogan on May 24 returned to one of his well-worn favourite themes, renewing his attack on high interest rates. “I clearly say this: I see high interest rates ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss