The Central Bank of the Republic of Türkiye (CBRT) is determined to increase domestic and international demand for lira assets, its Governor Hafize Gaye Erkan said Monday.
In a speech, Erkan also said, "The preliminary indicators show the share of lira assets is starting to increase in domestic and foreign investor portfolios."
The messages of the central bank governor delivered at the opening of the OIC-COMCEC Central Banks Forum Meeting, which was closed to the press, were shared on the official social media account of the bank on X, formerly Twitter.
"We will continue to resolutely implement our road map to establish disinflation in 2024," Anadolu Agency (AA) cited Erkan as saying.
Annual inflation rose to nearly 60% in August, with authorities acknowledging it is expected to increase further toward the end of the year. It had reached a 24-year high of 85.5% last October and stood at 47.83% this July after regressing to as low as 38.21% in June.
The bank on Thursday raised its key interest rate by a lofty 500 basis points to 30%, marking a second month of aggressive tightening after President Recep Tayyip Erdoğan expressed his strongest pledge of support for the economy team's policy overhaul.
Earlier on Monday, according to local media reports, the bank removed the minimum interest requirement for the Turkish lira conversion rate in FX-protected accounts.
Hence, the central bank took additional steps to support lira deposits and continues its steps with determination to transform it to make it attractive, AA reported.
The bank in August began rolling back a government-backed scheme that safeguards Turkish lira deposits against foreign exchange depreciation, marking another move toward more orthodox policies following a shift toward interest rate hikes.
With this recent move, the lira deposits would be more desirable than FX-protected deposits.
The bank has not stated the latest regulation.
As part of its earlier undertaken steps, the bank increased the invoice exemption limit for export and small and medium-sized enterprise (SME) loans to ease the credit flow to TL 250,000 ($9,188) from TL 50,000.
Last week, Treasury and Finance Minister Mehmet Şimşek said Türkiye had secured a combined $10.4 billion in financing from abroad since June, as it embraced more conventional policies to tackle inflation after a long-running easing trend.
"Our president's full support for our policies to take inflation under control is the most important factor that increases confidence in our policy framework," Şimşek said, expressing beliefs that his meetings with investors in the United States would contribute to the foreign inflows to Türkiye.
After his reelection in May, Erdoğan reshuffled his economy team and named two accomplished bankers, including Şimşek and CBRT Governor Erkan.
President Erdoğan reiterated Thursday that "he believes" in his new economy team and said he "hoped" they would start seeing the results of the new economic policies in the first quarter of 2024.
"I think we will start seeing positive developments regarding the inflation in the first quarter of next year. There are good signs right now," he noted.
Earlier this month, the government lifted its year-end inflation forecast to 65%. Erdoğan said at the time: "With the support of tight monetary policy, we will bring down inflation to single digits again."
In a separate statement last week, the president noted that confidence in Türkiye's economic stability has strengthened following the country's May presidential polls, highlighting the focus on establishing a "sustainable growth climate."
Seen as a milestone in the broader policy reversal that began after the May elections, a new comprehensive three-year medium-term map is centered on structural reforms, reining in price increases through tight monetary policy and eventually ensuring sustainable economic growth.
