Turkey is making it costlier for banks to offer short-term deposits that make up the bulk of a $124 billion government-backed lira savings program, a tightening of policy that will soak up billions in liquidity and attempts to discourage people from shifting into dollars.
Lenders now need to set aside more money as reserves for accounts of up to six months, which protect lira deposits from depreciation against hard currencies, according to a new central bank regulation published in the Official Gazette at midnight.
Istanbul-based economist Haluk Burumcekci estimates KKM deposits maturing in up to six months make up almost 80% of the total. The hike in reserve requirements will absorb about 200 billion liras in liquidity, he said.The emergency backstop used by Turkey to stave off a currency crisis has emerged as a major drain on state finances and now accounts for slightly more than a quarter of all deposits.
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