Istanbul, (AFP) – Turkey’s central bank cut its bank reserve requirement for foreign exchange deposits Friday, supporting a set of measures taken to cope with global economic strains.
“Required reserve ratios for foreign exchange deposits are decreased 0.5 points for all terms,” under the framework of the decisions that the monetary policy committee made Thursday, the bank said in a statement on its website.
“According to current data, around $930 million of liquidity will be provided to the market and the weighted average required reserve ratio will drop to 11 percent,” it said.
The bank Thursday cut its key interest rate but raised overnight borrowing rates in twin moves to cope with global economic strains and prevent the fast growing economy from being dragged into recession.
By easing reserve requirements — the amount of money held as a reserve against their liabilities — banks get more leeway in managing their deposit base and can lend more money, helping support the economy.
By increasing them, central banks take money out of the system and slow activity.