As part of the steps needed for tightening liquidity management, the Central Bank of the Republic of Turkey (CBRT) will reduce to zero the borrowing limits of lenders at the interbank money market.

The bank will also suspend overnight repo transactions via the quotation method against the Turkish lira-denominated lease certificate in the scope of Open Market Operations.

According to a statement from the bank on Monday, the decisions will be effective from Tuesday.

In response to what the bank said was another "decisive" step to maintain price and financial stability, the lira briefly rebounded before falling back to 8.4025 against the U.S. dollar at 8:09 a.m. GMT. Earlier, it touched 8.404.

“All tools required within the framework of monetary policy and liquidity management will continue to be used decisively,” the bank said in a statement.

The bank last month left its policy rate steady at 10.25% last week and raise its late liquidity window rate to 14.75% to counter the persistent double-digit inflation. Inflation stands at 11.75%.

Analysts say that by effectively shutting the overnight lending window, set at 11.75%, the bank will continue to raise the average cost of funding toward the top level of its interest rate corridor, which was raised to 14.75% last month.

Funding costs have jumped to 13.4% from a low of 7.34% in July.

CBRT Governor Murat Uysal last week said that weighted average funding is in an upward trend.

The bank on Friday also said it would not provide funding through the Borsa Istanbul (BIST) overnight market at 11.75%.