Turkey

Turkey should tighten monetary policy and give its central bank more independence, a mission from the International Monetary Fund (IMF) said on Friday, Reuters reported. "To address (Turkey's) challenges, the mission recommended early policy rate hikes accompanied by moves to strengthen the central bank's independence," said the IMF in a press release. "Such moves would help reduce inflation more durably and allow reserve buffers to be rebuilt over time." Forex reserves have dropped sharply in recent years due to market interventions and in the wake of a currency crisis in December.
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Turkey’s banking watchdog will continue tightening its grip on commercial loan access by further restricting companies holding foreign currency from borrowing liras, stepping up efforts to prop up the local currency and cool lending, Bloomberg News reported. The new rule announced on Oct. 21, and set to come into effect on Tuesday, will bar commercial lira loans to corporate borrowers if they hold more than 10 million liras ($537,000) in foreign currencies and if the amount exceeds 5% of total assets or annual sales.
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Turkish bankers have confronted top officials over rules that saddled them with government bonds and kept rates artificially low, according to people familiar with the matter, warning of massive risks in case monetary policy becomes far less accommodative, Bloomberg News reported. In a recent series of closed-door meetings with key decision makers, bank executives pressed complaints against regulatory measures that forced them to buy government debt, the people said, asking not to be named because the discussions were private.
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Turkey’s central bank has slashed interest rates for the third month in a row, making its biggest drop this year despite sky-high inflation that is squeezing people’s finances as it follows President Recep Tayyip Erdogan’s unorthodox economic views, the Associated Press reported. The Central Bank of the Republic of Turkey on Thursday lowered the benchmark rate by a massive 1.5 percentage points, to 10.5%. The bank cut rates by 1 percentage point each in August and September. The bank had kept the rate at 14% for eight months, pausing a previous round of cuts that triggered a currency crisis.
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Turkey's central bank slashed its policy rate by a more than expected 150 basis points to 10.5% on Thursday, and promised to halt the easing cycle urged by President Tayyip Erdogan after another similarly-hefty cut next month, Reuters reported. The move pushed the lira to a record low and sets up a likely rate cut to 9% next month. It comes after Erdogan repeatedly advocated for the unorthodox easing cycle and specifically called for single-digit rates by year-end.
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A Turkish central bank official refused to tell lawmakers the cost of a flagship deposit program introduced by the government to boost confidence in the lira, Bloomberg News reported. Irfan Yanar, head of budget and financial reporting at the central bank, repeatedly declined to give a figure for the FX-protected deposit accounts, which guarantee savings against falls in the lira, according to minutes of a parliamentary commission meeting on Monday seen by Bloomberg.
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The three countries that helped Moscow to maintain crude exports in the wake of its invasion of Ukraine appear to be stepping back into the market for Russian barrels, with Turkey taking a lead role in the latest buying, Bloomberg News reported. A marked increase in the volume of crude on tankers that have yet to signal a final destination makes the task of monitoring Russia’s exports more complicated, but most of those vessels end up in India, with a smaller number heading further east to China.
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Turkey began rounding up suspects in an investigation into alleged stock market fraud that led to a plunge in equities last month, according to state media, Bloomberg News reported. Istanbul’s chief prosecutor started the probe on suspicion of organized activity that violated Turkey’s capital markets law and issued a detention warrant for 10 people, two of whom remain at large, state news agency Anadolu said on Sunday. The arrests come after a sudden reversal in Turkey’s stock market, where banking equities dropped 39% in a three-week long rout that started on Sept.
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Turkey’s central bank delivered another massive interest rate cut Thursday despite eye-popping inflation above 80%, moving the opposite way from world economies that are raising rates to control prices as the lira sunk to record lows, the Associated Press reported. The Central Bank of the Republic of Turkey lowered the benchmark rate by 1 percentage point, to 12%. The lira was trading around 18.38 against the dollar, weakening further than the previous record low of 18.36 in December.
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Some Turkish banks are curtailing corporate lending after the government's latest raft of regulations raised their costs and forced many to cut their balance sheet risks, five banking and private sector sources told Reuters. The new rules, part of President Tayyip Erdogan's unorthodox management of the economy, have especially depressed longer-term lending. The owner of one mid-sized manufacturer said it was "harder and harder every day" to access needed credit.
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