By Justin Mays:
The Central Bank of the Republic of Turkey (CBRT) has come up with a new economic model that will be giving 4 percent interest on USD deposits to foreigners.
The government of Turkey has embarked on this model in order to boost its foreign currency. On the 29th of April 2022, the CBRT announced that it sold 1 billion 306 million dollars to the markets. The bank is doing this to maintain the exchange rates in a fixed band.
Foreigners will have the ability to get zero interest and long-term TL loans. The central bank is going to lengths to keep the economy of the country afloat and this is one of the implementations. This plan presents an opportunity for foreigners to invest in TL assets after a long intermission.
The new development came after a series of measures in recent months to support the lira after a slide in the currency late in 2021 which left it 44% weaker on the year.
Before this change, interest rates varied between 8.5% and 14% were applied to increase the lira share of required reserves.
CBRT is working on a plan to provide foreign investors with lira funding through a swap channel. According to this plan, the lira will be given through the swap channel on the condition of investing in bonds with a maturity of at least two years.
This system is still being polished and changes might be made during its course and the public waits for an official announcement by the Central Bank.