Turkey’s Central Bank Hikes Reserve Requirements on Short-Term FX-Linked Lira Borrowing
CBRT
The Central Bank of the Republic of Turkey (CBRT) has announced an increase in required reserve ratios on short-term Turkish lira-denominated borrowings from abroad, in a move aimed at strengthening macro-financial stability and enhancing monetary transmission mechanisms.
In a statement released Friday, the CBRT said the updated regulation targets foreign-sourced repo transactions and loans in Turkish lira with maturities under one year.
New Reserve Ratios by Maturity:
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Up to 1 month maturity: reserve ratio increased from 12% to 18%
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Up to 3 months maturity: raised to 14%
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Up to 1 year maturity: remains at 12%
The changes are part of the central bank’s broader strategy to discourage excessive short-term external borrowing in local currency, which is seen as a potential vulnerability for monetary stability.
A Signal of Continued Monetary Tightening
Analysts interpret the decision as another signal that the CBRT remains committed to tight monetary policy, as part of its ongoing effort to combat inflation and preserve the integrity of the Turkish lira.
By targeting short-term foreign funding, the central bank aims to reduce external liquidity dependence, mitigate risks from volatile capital flows, and ensure more effective control over domestic financial conditions.
