© Archyde.com. Turkey obliges banks with new rules to limit the holding of foreign currency
Turkey’s banking sector regulator has changed its procedures to push commercial banks to hold less foreign currency to meet their needs, following a warning letter issued last week.
According to the new decision, published in the Official Gazette, on Friday, the net foreign currency balance cannot exceed 5% of equity, compared to 20% previously, Bloomberg reported.
Some banks will have to cut their foreign exchange surplus by January 9, when the new rule takes effect.
According to official data, private banks’ net foreign exchange surplus reached 7% of equity by December.
The move came following a warning letter sent by the Central Bank of Turkey, which stated that banks carried out transactions to support their financial positions, which caused market volatility.
In recent months, the bank has warned banks several times of the repercussions of conducting large foreign exchange transactions with foreign banks outside trading hours.
It has lost regarding 29% of its value once morest so far this year, and is ranked as the worst-performing emerging market currency following the Argentine peso.
