Turkey

President Tayyip Erdogan declared on Tuesday a three-month state of emergency covering Turkey's 10 southern provinces hit by devastating earthquakes, and called it a disaster zone in a move meant to bolster rescue efforts, Reuters reported. The move came as the death toll from Monday's two major earthquakes, which hit a wide area of Turkey and Syria, exceeded 5,000 and as rescuers raced against time to dig people out of the rubble of collapsed buildings.

Turkey’s central bank is considering a measure to deter lenders from selling currency derivatives to their customers, the latest effort to curb growing corporate demand for dollars, Bloomberg News reported. The monetary authority is designing a new regulation to require banks to hold collateral for forward contracts, with the goal of ultimately cooling off demand for hard currency in the spot market, according to people familiar with the discussions.

Turkey’s central bank added ambiguity to the direction of its policy as it left interest rates unchanged on Thursday, Reuters reported. The Monetary Policy Committee, led by Governor Sahap Kavcioglu, kept the benchmark at 9% for a second straight month, matching the forecasts of all but one economist in a Bloomberg survey. But unlike last month, the MPC’s latest guidance didn’t describe the current level of rates as “adequate,” a change that could be setting the stage for more monetary easing, according to Bloomberg Economics.

Turkish inflation decelerated at its steepest pace in more than a quarter century, a slowdown that may be at risk from a public spending splurge planned ahead of elections, Bloomberg News reported. Consumer prices rose an annual 64.3% in December, down from 84.4% the previous month, according to data released by state statistics agency TurkStat on Tuesday. The median forecast of economists surveyed by Bloomberg was 66.7%.

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.

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.

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.

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.

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.

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.