Turkey’s central bank is expected to introduce a new instrument in upcoming days to help manage the corporate sector’s exchange rate risk, its deputy governor Erkan Kilimci told state-run news service Anadolu on November 13.

“We are planning to launch non-deliverable foreign exchange forward (NDF) transactions. Forward foreign exchange transactions are one of the most commonly used instruments in exchange rate risk management,” Kilimci said.

“In non-deliverable foreign exchange forward transactions, the difference between the forward exchange rates set on the contract day and the spot rate on the settlement day will be paid in Turkish liras. In this way, a significant contribution will be made to the corporate sector’s exchange rate risk management and the Central Bank reserves will not be affected because of the instrument’s nature. These transactions will be conducted by auctions and via the banks that are members of the foreign exchange market," he explained.

“Turkey is introducing a macro-prudential framework to help reduce corporate FX risks,” deputy PM Mehmet Simsek wrote on Twitter on November 14 following Kilimci’s statements.

“Small companies will be barred from borrowing in FX. [There will be] a strict limit on how much exporters can borrow. Other corporates will have to hedge themselves,” Simsek said.

A senior economy official told Reuters the new product would create a market with deeper volume for Turkish companies, which were running a net forex position of -$212bn as of August.

Last week, the country’s national lender took steps to prop up the struggling lira which has weakened more than 15% against the dollar over the past 12 months.