Turkey’s central bank is offering cheaper loans to exporters to help ease selling pressure on the lira, which has weakened by more than 20 percent this year, Bloomberg reported on Monday.
The central bank is offering the so-called rediscount credits at below its key interest rate so long as exporters commit to selling more of their foreign currency income for liras and avoid pushing up demand for dollars, Bloomberg said citing unidentified people with direct knowledge of the matter.
The funds would be available to companies in sectors excluding the defence industry for up to 360 days, said the people, who asked not to be identified because the decision has not been made public.
Turkey is using unorthodox means to curb demand for dollars and euros after the lira slumped to successive record lows last year. President Recep Tayyip Erdogan, who has sacked three central bank governors in three years, has barred monetary policymakers from increasing interest rates to defend the lira. The currency lost 44 percent of its value in 2021.
Exporters must agree to sell a further 30 percent of their foreign currency earnings to commercial banks and not purchase hard currency in the market for a month, the people said. The authorities have already required them to surrender 40 percent of their earnings in foreign exchange to help stabilise the lira. The central bank declined to comment on the new loans, Bloomberg said.
Last week, faced with renewed lira selling pressure, the government and regulators announced a series of measures to steady the lira and help rein in inflation, which has surged to 73.5 percent annually, the highest level in emerging markets and developed economies. The steps including curbs on consumer loans and the introduction of special bonds to encourage savings by households.
The central bank’s benchmark interest rate stands at 14 percent. It has remained at that level since late last year when the bank cut borrowing costs from 19 percent between September and December.
The lira was trading up 0.1 percent at 17.24 per dollar as of 10:41 a.m. local time in Istanbul on Tuesday.