Turkey raises banks' forex reserve ratio

Ankara: Turkey's central bank raised the foreign currency requirement that banks must deposit, reversing part of a step it took to increase liquidity during the global financial crisis.

The bank in Ankara raised the requirement to 10 per cent for foreign currency loans from 9.5 per cent, according to a directive published in the Official Gazette on Thursday. The increase will reduce foreign exchange liquidity by about $720 million (Dh2.6 billion), the bank said in an e-mailed statement.

Thursday's decision means the bank is halfway to reversing the two percentage point cut it made to the foreign currency reserve requirement on December 5, 2008.

On April 14 the bank outlined plans for an exit strategy to unwind liquidity-boosting measures it took in 2008 and 2009.

The lira was little changed, trading at 1.5124 per dollar at 9.34am in Istanbul.