Turkey’s central bank raises reserve requirement on forex deposits

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Turkey's Central Bank headquarters is seen in Ankara.

Turkey’s central bank has increased the reserve requirement ratios on forex deposits and participation funds by 100 basis points for all maturity brackets, in a move to support financial stability, it said on Monday, Reuters reported.

In a statement the bank also said the remuneration rate for US dollar denominated required reserves, reserve options and free reserves held at the bank has been decreased by 100 basis points and set at 1 percent.

The bank said the measures, which when announced gave a bit of support to the Turkish lira, would withdraw $2.1 billion of forex liquidity from the market.

Turkey has taken several steps this year to curb a year-long trend of Turks shedding lira for more stable currencies after last year’s currency crisis.

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