The Central Bank Raised Swap Limits! The Central Bank has increased its swap limits. With its decision regarding the Turkish lira-denominated swap market against foreign currency, the Central Bank of the Republic of Turkey raised the cap on total outstanding swap sales from 30% to 40%.
In a letter sent to banks, the Central Bank stated, “The total amount of outstanding swap sales in the Turkish Lira against foreign currency swap market has been limited to 40% of the transaction limits in the Foreign Exchange and Cash Markets.”
Confidence in Markets from the Central Bank!
The Central Bank’s swap move is intended to bolster market confidence. Experts who commented on the action said it helped restore trust in the markets. Previously, on April 22, the Central Bank had increased this limit from 20% to 30%.
Analysts also agreed that the decision allows banks to enter into larger swap transactions with the Central Bank of the Republic of Turkey and that the Bank can use this measure to strengthen its reserves.