CBRT: Reserve accumulation strategy to continue in 2024


“In 2024, the strategy of accumulating reserves will continue as long as market conditions permit,” the CBRT said in a statement.

The Central Bank published the Monetary and Exchange Rate Policy Text. The statements in the text are as follows:

The greatest contribution of central banks to the increase in social welfare is realized by ensuring price stability. In this framework, the main objective of the Central Bank of the Republic of Turkey (CBRT) is to achieve and maintain price stability. The forecasts announced in the Inflation Report will be used as intermediate targets as a reference for inflation expectations.

The one-week repo auction rate will remain as the CBRT’s main policy tool. Quantitative tightening steps will be continued by increasing the variety of sterilization tools used.

In order to expand its international influence, the CBRT will maintain effective communication with international organizations and platforms as well as with external stakeholders such as other central banks. In this context, the CBRT will organize Investor Days, which will feature technical presentations on topics such as inflation, monetary policy, financial markets and banking.

Simplification process will continue in 2024
In 2024, with the steps to be taken to prioritize Turkish lira deposits, the share of Turkish lira deposits in the banking system is targeted to rise to 50 percent and the decline in the CHC balance will continue.

The credit composition will be shaped in a framework that is supportive of the disinflation process and macroeconomic balances.

In this process, measures may be taken to mitigate the impact of tighter financial conditions on low-income groups.

In order to maintain the effectiveness of the monetary transmission mechanism and support monetary tightening, the CBRT will sterilize the excess liquidity by increasing the variety of sterilization instruments and the quantitative tightening process will continue.

The CBRT OMO portfolio size is set at a nominal TL 200 billion for 2024, with the option of additional purchases reserved.

In order to contribute to banks’ TL and FX liquidity management, swap transactions will continue in 2024. However, the amount of swap transactions conducted by the CBRT is planned to be gradually reduced.

FX equivalent currency transactions between the CBRT and banks authorized to trade in FX markets will continue.

In the FX Deposit Market at the CBRT, banks will continue to be provided with FX liquidity facilities with one-week and one-month maturities with a limit of approximately USD 50 billion.

Banks will be able to bring collateral FX deposits or gold deposits to the CBRT within the limits allocated to them and at various maturities.

International reserves have displayed a strong upward trend since the second half of 2023 and reached USD 145.5 billion as of 22 December 2023, thanks to the effects of monetary tightening and the simplification steps taken in the macroprudential framework. Accordingly, the strategy of accumulating reserves will continue in 2024 as long as market conditions permit and the steady upward trend in international reserves will be maintained.

In 2024, additional facilitating steps may be taken in export and FX-earning services rediscount credits in order to improve the financing conditions of exporting firms and support their access to financing.

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