Liquidity surplus in the market returns to levels seen before CBRT measures

Although a liquidity deficit was recorded in the system for a period following the reserve requirement steps taken by the Central Bank of the Republic of Turkey (CBRT), this situation did not prove permanent.

According to CBRT data, net funding rose to 218.4 billion TL as of December 20.

With the measures announced at the beginning of November, the CBRT increased reserve requirement ratios for foreign currency-protected deposits and introduced an additional reserve requirement application in Turkish Lira for foreign currency deposits. These practices went into effect as of November 10.

However, net funding returned to negative territory on November 22, and a negative trend in net funding was observed after that date.

CBRT Governor Hafize Gaye Erkan had pointed out that the quantitative tightening process was progressing alongside the monetary tightening process, stating that 350 billion TL in liquidity would be withdrawn from the market with the latest reserve requirement step. Erkan had noted that with this step, the total liquidity withdrawn from the system had reached 1 trillion TL.

News Source: 12punto