Turkey Central Bank Raises Foreign-Currency Reserve Requirements

(Bloomberg) -- Turkey’s central bank took another step to boost its coffers by raising the amount of foreign currency lenders are required to park at the regulator as reserves.

The monetary authority increased reserve requirements for foreign-exchange deposits by 200 basis points, according to a statement on Monday. The measures will withdraw around $4.2 billion of liquidity from the market, it said.

Timeline of Turkey’s Efforts to Stop the Rot and Defend the Lira

Data last week showed that Turkey’s net international reserves dropped to the lowest level since October as concerns linger that the central bank is trying to prop up the lira before elections next month. It’s unnerved investors by failing to give a clear explanation on what’s behind the recent moves in its reserves.

The central bank also introduced a new swap on May 9 that will allow it to bolster its international reserves by borrowing gold from commercial lenders.

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