Ankara forces companies to sell hard currency as circle tightens
The Turkish government’s latest loan restriction may help the embattled lira recover to some extent, but not without the risk of damaging side effects.
Desperate against galloping inflation but bent on keeping interest rates low, Turkey’s government has turned to interventionist measures akin to capital controls to bolster the embattled lira. The latest is designed to force companies to reduce hard-currency holdings.
In a surprise announcement late on June 24 after local markets had closed, the Banking Regulation and Supervision Agency banned banks from issuing lira loans to companies holding foreign exchange worth more than 15 million liras ($895,000) if that amount exceeds 10% of their total assets or annual sale revenues.
