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Turkey central bank says policy stance adequate to back recovery

REUTERS/Umit Bektas/
Ankara has secured some $28 billion in currency swap deals in recent years

The Turkish central bank said on Thursday the current monetary policy stance was adequate to support recovery following last month’s earthquake by maintaining price stability and financial stability.

In the minutes of last week’s policy committee meeting, where the central bank left its key rate unchanged at 8.5 percent, it said the effect of quake-driven supply-demand imbalances on inflation was being closely monitored.

Domestic consumption demand, the high level of energy prices and weak economic activity in main trade partners was keeping the risks on the current account balance alive, it added.

Meanwhile, Turkish companies facing forex payments will be able to open lira accounts protecting against depreciation without needing to convert foreign exchange, and a central bank source said on Thursday there would no limit on the interest rate offered.

An announcement in the country’s Official Gazette said the accounts will have a minimum maturity of one month compared to a previous minimum of three months under the scheme.

Ankara launched the scheme protecting lira deposits from depreciation in late 2021 to ease an historic currency crash in which Turks were flocking to dollars. The lira lost 44 percent versus the dollar that year, and nearly 30 percent in 2022 but has stabilised this year ahead of May elections.