Daily Management Review

Turkish Finance Ministry compensates depositors' losses due to lira fluctuations


Nureddin Nebati, Turkey's Treasury and Finance Minister, has proposed new restrictions governing Turkish lira deposits indexed in foreign currencies, in order to protect the country's citizens from exchange rate volatility.

jon smith
jon smith
The Turkish Central Bank will publish the exchange rate daily at 11:00 a.m. to compute the exchange rate difference, according to the decree.

"If the exchange rate fluctuates more than the interest rate at maturity, the difference will be recorded in the customer's Turkish lira account. Accounts with maturities of 3, 6, 9, and 12 months can be opened. The Central Bank's discount rate will be set at the minimum interest rate. Any bank can become a member of the system. The account becomes current and the entitlement to interest is cancelled if money is taken from it before the maturity date "reads a resolution posted on the minister's Twitter microblog.

In January, the Turkish currency was trading at 7.4 lira per dollar, having fallen by 60% when it struck a new low, with more than 40% of its value lost in the previous month. Turkey's central bank slashed its discount rate to 14 percent from 15 percent on Thursday, sending the lira plummeting.

source: reuters.com