Turkish central bank to launch forex depot market

By Muhammed Ali Gurtas

ANKARA

Turkey's Central Bank has decided to open Foreign Exchange Deposits against Turkish Lira Deposits market to increase flexibility and instrument diversity of the Turkish lira and foreign exchange liquidity management, according to an official statement on Tuesday.

The bank said that opening forex depot market decision was taken in accordance with the bank's current monetary and exchange rate policy framework.

"The details regarding the transactions to be conducted via auction method on behalf of the Central Bank of the Republic of Turkey will be announced via data vendors," the bank said.

Turkish central bank's recent decision is the last one of a series of measures taken to handle the country's local currency volatility against foreign currencies.

Last week, bank lowered the borrowing limits of banks to a total of 11 billion Turkish liras (approx. $2.9 billion) in the Interbank Money Market, to support the value of the Turkish lira.

The bank previously cut the reserve requirement ratios for commercial banks’ foreign exchange deposits to provide an additional $1.5 billion to prop up the lira.

Last week it also cancelled some repo auctions, aiming to boost the Turkish lira by reducing the amount of local currency circulating in markets.

The U.S. dollar/Turkish lira exchange rate decreased to stand at 3.7680 as of 5 p.m. (1400GMT) Tuesday, compared with 3.7840 in Monday's closing session.