Turkish central bank lowers lira required reserves rate to zero

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The interest rate applied to Turkish lira-denominated required reserves has been lowered to zero by the Turkish central bank, reports said Monday.

The Central Bank of the Republic of Turkey (CBRT) has ended the practice of making additional interest payments on sums converted from foreign currency to lira by real persons, local media and Reuters reported.

The central bank also changed the commission system, which it had previously announced to apply at a rate of 1.5% to foreign currency accounts for those who could not convert deposits from foreign currency to lira.

The moves were announced in a central bank letter sent to banks on Friday and seen by Reuters, with the changes effective as of April 15.

The latest moves come after a series of measures in recent months to support the lira after a slide in the currency late in 2021 left it 44% weaker on the year as a whole.

Before the latest change, interest rates varying between 8.5% and 14% were applied to increase the lira share of required reserves.

The central bank also postponed from July 8 to Sept. 2 the date by which real and legal persons should reach a 20% conversion rate target for sums converted from foreign currencies to lira.

Forex commission rates, which were set at zero at the end of 2020, were raised by the bank to 1.5% for those who could not meet the 10% and 20% rates of conversion from forex to lira by a certain date.

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