Central Bank sets new rules for foreign exchange conversion support

The Central Bank of the Republic of Turkey (CBRT) has made comprehensive changes to the practice supporting the conversion of companies' foreign-sourced foreign exchange into Turkish lira. With the communiqué published in the Official Gazette, the aim is to link the support more directly to the value-added created by the companies.

According to the new regulation, companies will be able to benefit from foreign exchange conversion support in proportion to the value-added they produce. In the calculation of value-added, the profitability and labor costs of the companies will be taken into account.

A new mechanism has also been envisioned for intermediary exporters. Accordingly, if intermediary exporters fill their value-added-based limits, they will be able to perform foreign exchange conversion transactions on behalf of their high-value-added suppliers. In this case, the support payment will be transferred directly to the supplier's account.

POSITION REQUIREMENT INSTEAD OF NON-PURCHASE COMMITMENT

With the regulation, the previously applied commitment not to purchase foreign exchange for companies benefiting from the conversion support has been lifted. Instead, a new condition based on the companies' foreign exchange positions has been introduced.

As is the case with rediscount credits for exports and foreign exchange-earning services, the foreign exchange positions of companies benefiting from the support will not be allowed to exceed the upper limit determined by the CBRT prior to the application.

The CBRT also stated that the intermediary functions of banks in the execution of the practice have been strengthened and additional measures have been taken to increase efficiency. The new rules will begin to be applied on October 1. The details of the regulation will be included in the Implementation Instruction.

With the communiqué, the base rate for foreign exchange conversion support was set at 2 percent. It was also decided to extend the temporary period regarding the 3 percent support payment and the application of the 35 percent export proceeds sale obligation until January 31, 2027. The duration of these temporary practices was set to expire on July 31.

News Source: 12punto