CBRT doubles banks' borrowing limits for overnight transactions
- DAILY SABAH, ISTANBUL
- Aug 30, 2018
Turkish banks' borrowing limits for overnight transactions at the Interbank Money Market established within the Central Bank of the Republic Turkey (CBRT) as of yesterday would be twice the limits applicable before Aug. 13, the bank announced in a statement yesterday.
The move comes amid the CBRT's efforts to provide the banks "with all the liquidity that they need."
The CBRT said in a statement on Aug. 13 that the measures were introduced "to support financial stability and sustain the effective functioning of markets."
The measure came after U.S. President Donald Trump doubled tariffs on Turkish steel and aluminum on Aug. 10.
Relations between Ankara and Washington have been rocky since the Trump administration imposed sanctions on Turkey's interior and justice ministers after Ankara refused to release American pastor Andrew Brunson, who is under house arrest in Turkey facing terrorism-related charges.
The Turkish lira, which dropped by more than 40 percent since the beginning of this year with most of this devaluation incurring over the first two weeks of August. These fluctuations in the exchange rate has been seen as the result of unsubstantiated manipulations on the Turkish lira and the economy, which were deemed as the main strategy of an economic war waged against Turkey by U.S. President Trump.
Turkish officials described the U.S. moves and their effects on the lira as an economic war, and retaliated in kind to U.S. sanctions, increasing tariffs on U.S. alcohol, tobacco and automotive products, while also imposing the same sanctions on U.S. officials.
On the other hand, the chief executive officers of most robust Turkish banks and heads of leading business associations whose members make up a considerable bulk of the Turkish economy, have repeatedly emphasized that the fundamentals of the Turkish economy are solid and macroeconomic indicators fail to account for the recent slide in the currency.
Leading businesspeople and financiers noted earlier this month that the high volatility in the exchange rate has been impossible to explain within the framework of established economic theories.