Central Bank Lıfts Fx Reserve Requırement Ratıos

- Central Bank of Turkey lifted the reserve requirement ratios of foreign exchange (FX) liabilities of the banks by average 1.1 points, to strengthen the lira, due to latest developments in the global markets.

The Central Bank said, "With a view to supporting financial stability and by taking into account the latest developments in global markets, the reserve requirement ratios of foreign exchange (FX) denominated liabilities of banks and financing companies are revised in order to encourage the extension of maturities of non-core liabilities" in a statement.

The reserve requirements were lifted to 18 percent from 13 percent for the liabilites with maturity up to 1 year, while the ratios were lifted to 13 percent from 11 percent for the libabilites maturity up to 2 years.

The ratios were lowered for the liabilities with maturity up to 3 years to 8 percent from 11 percent, while the ratios were lifted to 7 percent from 6 percent for the liabilities with maturity up to 5 years and kept the ratios unchanged at 6 percent for the liabilities with maturity longer than 5 years.

The increase in FX reserve requirement ratios, would contribute to the Central Bank FX reserves by approximately 3.2 billion dollars, the Central Bank said, by lifting the average reserve requirement ratio for FX by 1.1 points to 12.8 percent, from 11.7 percent current levels.

"Besides, to strengthen the automatic stabilizing feature of the Reserve Options Mechanism (ROM), technical adjustments are implemented in reserve option tranches and coefficients, in a way also to largely compensate for the FX liquidity withdrawal that would arise from the changes in FX reserve requirement ratios" said in the Central Bank statement.

The revisions will be effective as of the calculation period dated 13 February 2015 and the maintenance period will begin on 27 February 2015.