Turkey eases reserves rules for third time

Bloomberg

Turkey’s central bank lowered reserve requirements for banks, the third time since July’s attempted coup that the regulator has acted to boost lira and foreign-exchange liquidity.
Lira reserve requirement ratios were lowered by 50 basis points, the bank said in a statement on Tuesday. The bank also lowered the amount of foreign-exchange and gold that lenders must keep as collateral for their liabilities. The changes will add around $408 million and $670 million of
liquidity if lenders adopt the new ratios, the bank said.
The rule changes come after foreign trade data suggest domestic demand may have cooled since the failed putsch in July. Figures compiled by the central bank show annual consumer loan growth dropped to below five percent, around the lowest since at least 2010, even after interest rates were lowered by 225 basis points since March. Growth is expected to be “moderate” in 2016, but will be far better than Turkey’s peers in the Organisation of Economic Co-operation and Development, Finance Minister Naci Agbal said on Tuesday.
“The central bank wants to make rate cuts more effective on loan and deposit rates,” Ibrahim Aksoy, an investment strategist at HSBC Asset Management in Istanbul, said.

by e-mail. “A targeted decline in deposit costs is also part of the game.”
The lira trimmed gains after the announcement, trading 0.1 percent stronger at 2.9423 per dollar at 12:11 p.m. in Istanbul.