Turkey Boosts Reserve Rules on Some Deposits to Support Lira - Bloomberg

Turkey Boosts Reserve Rules on Some Deposits to Support Lira - Bloomberg

In a significant move aimed at bolstering its foreign currency reserves and stabilizing the Turkish lira, the Turkish central bank has announced new rules that require banks to hold a portion of their deposits in foreign currencies. This policy shift comes amidst ongoing geopolitical tensions and economic challenges that have strained Turkey's financial system [2].

The central bank's decision to impose these new reserve requirements follows a period of political turmoil and economic instability. In recent months, Turkey's foreign currency reserves have declined by an estimated $50 billion, largely due to political events such as the arrest of Istanbul Mayor Ekrem İmamoğlu [2]. The central bank has been working to rebuild these reserves and reduce dependency on the US dollar.

The new rules, which were announced on June 19, 2025, require banks to hold a certain percentage of their deposits in foreign currencies. This move is intended to help the central bank manage liquidity and stabilize the Turkish lira. The central bank has not disclosed the specific details of the new reserve requirements, but it has stated that the measures are aimed at promoting stability and facilitating trade in local currencies [2].

The Turkish central bank's actions are part of a broader strategy to diversify foreign currency resources and deepen bilateral financial ties. In addition to the new reserve requirements, Turkey and China have renewed a longstanding currency swap deal worth nearly $5 billion and agreed to establish a yuan clearing system in Turkey [2]. This arrangement allows the Turkish and Chinese central banks to exchange up to 189 billion Turkish lira, or 35 billion Chinese yuan, over a three-year period.

The Turkish central bank's actions are likely to be closely watched by investors and financial professionals. The new reserve requirements could have implications for the Turkish banking sector and the broader economy. While the measures are intended to promote stability, they may also increase the cost of borrowing for businesses and consumers. Additionally, the renewed currency swap deal with China could have implications for Turkey's trade relations and its ability to attract foreign investment.

In conclusion, the Turkish central bank's decision to impose new reserve requirements on banks is a significant step in its efforts to stabilize the Turkish lira and manage the country's foreign currency reserves. The new rules, along with the renewed currency swap deal with China, are part of a broader strategy to promote economic stability and facilitate trade in local currencies.

References:
[1] https://www.investing.com/news/stock-market-news/exclusiveusda-develops-potential-plan-to-vaccinate-poultry-for-bird-flu-4104276
[2] https://www.turkishminute.com/2025/06/14/turkey-china-renew-4-8-billion-currency-swap-deal-set-up-yuan-clearing-system/
[3] https://www.nbcphiladelphia.com/news/business/money-report/european-stocks-to-open-in-mixed-territory-as-sentiment-dips-traders-await-central-bank-moves/4213965/?noamp=mobile&os=fuzzscan0xxtr3Dapp&ref=app