Turkey’s Central Bank raises rates on swap transactions

ISTANBUL

Turkey's Central Bank has raised the interest rate for gold/foreign currency swap transactions to 15% following Thursday's policy meeting.

The rate was increased from 13.25%, according to information obtained by Anadolu Agency.

Currently, swap transactions are carried out by the Central Bank with the one-week quotation method and 1-3-6 months traditional method auctions.

In addition, the bank performs swap transactions in the BIST Swap Market in line with the interest rates applied in the quotation swap market.

At the bank's Inflation Report meeting, it was stated that the funding provided by the Central Bank within the framework of all swap opportunities constituted approximately 60% of the system's funding need.

Analysts stated that with Thursday's decision on hiking interest rates, the Central Bank equated the interest applied to the Turkish lira with the policy rate, as expected.

The Central Bank on Thursday increased its one-week repo rate -- also known as the bank's policy rate -- from 10.25% to 15%, tightening its monetary policy to ensure price stability.

The decision was announced in a statement following the bank's first policy meeting under its new governor, Naci Agbal, who was appointed on Nov. 7.

The bank decided to provide all funding through the main policy rate, which is the one-week repo auction rate.

Tightening its monetary policy to ensure price stability, the bank made it clear that all factors affecting inflation will be taken into account to ensure price stability.

Last week's shake-up of the economic management team followed by comments from Turkey's President Recep Tayyip Erdogan had raised expectations of a sharp interest rate hike at the meeting.

*Written by Aysu Bicer in Ankara