Turkish central bank’s efforts to guard lira: Costlier Dollar for Some Firms

According to Bloomberg, Turkey’s central bank asked commercial lenders last week to use a dual foreign-exchange rate for transactions with companies in a bid to step up its efforts to ease pressure on the lira.

The scheme will work as banks’ will be asking companies with a foreign-exchange surplus to pay a premium to buy more dollars.

Lenders were asked to raise the minimum USDTRY rate at which transactions with those companies and individual investors can take place to 19.2 from 19.15 previously, the people said, asking not to be identified, citing sensitivity of the matter. The lira closed last week at 19.0138 to the dollar.

The Turkish central bank declined to comment.

Authorities have gradually widened the spread between the exchange rate used in interbank transactions and the levels offered by lenders to their retail customers. Corporate clients with a short net FX position will still be able to buy dollars at interbank rates, the people said.

Purchases of $2.5 million or more need to get a clearance from the central bank, they said.

Keeping the lira steady has become a cornerstone of Turkish authorities’ efforts to contain inflation, which breached 80% late last year. Authorities want currency volatility in check going into elections in May.