CBRT raises the interest rate of TRY reserve requirements
Central Bank of the Republic of Turkey (CBRT), increased the interest rate paid on TRY required reserves by 200 basis points " in accordance with steps taken covered normalization period". The Central Bank also halved the foreign currency reserve requirement commissions. The Central Bank said in a statement that the steps will reduce the intermediation cost of the banking system.
While the CBRT raised the TRY RR interest rate from 5% to 7%, the commission rate for USD denominated RRs decreased from 0.0250% to 0.0125%. On the other hand, CBRT stated that banks with real loan growth that meet the conditions determined by the communiqué on required reserves will be applied at a rate of 9% and 2% to other banks. Before today's decision, it was applied as 7% to banks that provided credit increase and 0% to other banks.
The move of the Central Bank today is a part of the normalization steps in the last period. With the increase in TRY RR interest rates, it is aimed to give more interest to the TRY that banks hold in the CBRT and to enable the banks to hold more TRY in return.. Within this framework, the decrease in RR held in foreign currency and the increase in RR in TRY is positive for lira. On October 22, we expect the tightening cycle to continue, an interest rate hike of 150 to 200 basis points to come, and funding to continue to be directed to the interest rate corridor and the LLW range.
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