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TURKEY: Turkey to End FX Swaps With Banks Via Quotation Method

TURKEY

The central bank has terminated FX swaps with local lenders via a quotation method as of Thursday, Bloomberg HT report citing sources. They add that authorities have been using these swaps to lend liras to financial institutions in return for FX.

  • This marks the latest in a series of measures the central bank have been using to curb excess lira liquidity in a bid to reverse the decline in deposit rates - thereby supplementing its tight stance on monetary policy.
  • The move should make fewer liras available to commercial lenders, which could force them to source local currency elsewhere and reverse the decline in deposit rates.

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