Automotive Expotrs November 2022

Central Bank
takes fresh steps
to boost Turkish
lira deposits
Türkiye’s central bank took fresh steps to
boost Turkish lira deposits, raising the ratio
of bonds that banks must hold for foreign
exchange deposits and requiring those with
less than 50% lira deposits to hold even
more bonds from 2023.
The Central Bank of the Republic of Türkiye
(CBRT) raised the securities maintenance
ratio required for foreign exchange (forex)
deposits to 5% from 3% of deposits as of
this month, and said further steps would
be taken this year and next as part of its
“liraization strategy.”
In 2023, lenders with less than half of
deposits in lira will need to hold an
additional seven percentage points of
bonds, marking the latest regulatory
change meant to backstop policy of interest
rate cuts.
“The 7 percentage points of additional
bonds requirement is high, so it appears
the central bank wants... banks to have at
least 50% and if possible 60% of deposits
in lira next year,” said a forex dealer at one
bank.
Bankers told that the new rules would
require lenders to hold an additional TL 80-
TL 100 billion ($4.3-5.4 billion) of bonds.
The bankers, requesting anonymity, also
said individuals’ lira deposits were now
46% of total deposits, while commercial
entities lira deposits were 47%.
Also from 2023, banks whose lira deposits
are between 50-60% of the total must hold
an additional two percentage points of
bonds beyond the 5% set for this year, the
central bank said.
The monetary authority has urged forex
conversions with a series of rules beginning
in December 2021, when the national
currency depreciated sharply, after which
lira deposits rose.
“The practice has strengthened banks’
balance sheets and supported financial
stability,” the central bank said.
By the beginning of 2023, the level of
securities banks must hold will be based on
lira-deposit share targets.
Previously, the central bank required banks
to hold an additional 7% of securities if
they had a conversion rate from forex to
lira of less than 5% of their deposits.
The Banking Regulation and Supervision
Agency (BDDK) data shows individuals’
forex deposits amounted to TL 2.69 trillion
($144.74 billion) as of Oct. 7, while lira
deposits totaled TL 2.02 billion.
In the same period, forex deposits of
commercial entities were TL 1.61 trillion
while lira deposits were TL 1.27 trillion.
Türkiye’s central bank is expected to cut its
key policy rate again, according to surveys,
after President Recep Tayyip Erdoğan called
for more easing each month and said rates
should be single digits by year-end.
The CBRT surprised markets as it cut
its benchmark one-week repo rate by
200 basis points to 12%. The bank had
embarked on a rate-cutting cycle more than
a year ago as it lowered its one-week repo
rate by 500 basis points to 14%, where it
had left it steady in the first seven months
of this year. Monetary easing is part of
the government’s new economic program
that seeks to boost growth, investments,
employment and exports by lowering
borrowing costs, especially for exporters
and small and medium-sized companies.
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