Recent developments have led to the rapid depreciation of the Turkish Lira against foreign currencies. In response to increasing volatility, the Central Bank of the Republic of Turkey (CBRT) has announced interim measures.
CBRT Interest Rate Decision
The CBRT raised the overnight lending rate, causing fluctuations in exchange rates. The Lira experienced volatility with the rate against the dollar dropping to approximately 37.5 TL, but then rebounding towards the 38-dollar threshold.
Key Rate Information
The main interest rate (one-week repo rate) used by the CBRT for lending to banks can decrease loan interest rates, leading to increased borrowing and economic activity. The overnight lending rate (marginal funding rate) is typically higher and is used when banks urgently need liquidity. The overnight borrowing rate is the rate banks receive when depositing excess funds at the CBRT, usually lower than the policy rate. The Late Liquidity Window (GLP) rate is a last resort borrowing option for banks outside business hours.
Additional Actions and Comments
Further actions may be taken if necessary to maintain the effective functioning of financial markets.
The CBRT's measures aim to reduce the fluctuations of the Turkish Lira and control inflation to maintain financial market stability.
