Turkey is planning to increase the rate at which exporters must convert their hard currency revenue into lira to 40 percent, from 25 percent, in a bid to boost reserves, Bloomberg reported, citing an official.
Central Bank Governor Şahap Kavcıoğlu discussed the plan on Tuesday with members of the Turkish Exporters Assembly, the official said, asking not to be named because the meeting was private. The proposal still requires Treasury and Finance Ministry approval. The central bank declined to comment.
Turkey made it mandatory for exporters to convert a quarter of their hard currency revenue into lira at the central bank in January. The nation’s gross reserves excluding gold holdings stood at about $67 billion at the beginning of this month, down 7.9 percent from the end of 2021. The central bank sold about $7.3 billion in a series of direct interventions in the currency markets in December.
The monetary authority has been reluctant to tackle inflation through increased interest rates, focusing instead on the current account balance. Inflation is currently running at an annual rate of 61 percent. The bank’s Monetary Policy Committee meets April 14, and none of the analysts surveyed by Bloomberg expect an increase in the one-week repo rate.
The lira weakened 8.8 percent against the dollar this year, the third-worst performance among emerging market currencies tracked by Bloomberg.