Skip to content Skip to Search
Skip navigation

Turkey cancels required reserves for longer maturity lira deposits

Turkey lira Reuters
Amundi's tentative optimism is balanced by upcoming nationwide local elections in March

Turkey’s central bank has cut the required reserves of Turkish lira deposits to zero percent with maturities longer than three months, from varying percentages between three and eight percent, the bank said on Sunday.

“To encourage maturity extension of lira deposits, the bank has decided to set reserve requirement ratios for lira deposit accounts with maturities longer than three months at zero percent,” the bank said in a statement.

“Additionally, it has been decided to set reserve requirement ratios at zero percent for the increase in FX liabilities with maturities longer than six months provided directly from abroad until the end of 2023,” the statement said.

In December, Turkey’s annual inflation is expected to fall sharply to 66.8 percent in December due to a favourable base effect but drop only to 43.2 percent by the end of 2023, a Reuters poll showed, while monthly price rises should remain elevated.

The end-2023 forecast is nearly twice that of the government, and raises the prospect of continued cost-of-living strains as Turks vote in tight presidential and parliamentary elections next year.