Turkey cbank takes another step to strengthen lira

By Tuba Sahin

ANKARA (AA) - The Turkish Central Bank fixed foreign exchange rates for rediscount credit repayments for export, the bank announced on Friday.

"It has been decided that the repayments of rediscount credits for export and foreign exchange earning services that have been extended before 25 May 2018, which will be due by 31 July 2018 (included), can be made in Turkish liras at an exchange rate of 4.20 for the dollar, 4.90 for the euro, and 5.60 for the sterling, provided that they are paid at maturity," the bank said in a statement.

It added that the exchange rate on the date of credit extension will be applicable in credit repayment, if the rate on the date of credit extension is higher than those rates.

Following the bank's decision, the dollar/lira rate fell steeply to below 4.69 from 4.7805 at market opening as of 9.30 a.m. local time (0630GMT).

Friday's move follows the action of hiking interest rates on Wednesday, in line with its tight monetary policy stance to improve the inflation outlook.

On Wednesday, the bank hiked late liquidity window interest rates, as the borrowing rate was kept at 0 percent while the lending rate was raised from 13.50 to 16.50 percent.

In recent months the Turkish lira has been losing ground to the U.S. dollar. The USD/TRY rate has risen nearly 20 percent since the beginning of this year.

The dollar/lira rate hit an all-time high -- reaching 4.93 -- just before the bank raised rates, versus last year, when one dollar traded for 3.65 lira on average.

Also, the bank on Thursday raised the upper limit of its forward foreign exchange sale position for the second quarter of this year.