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Tuesday March 5 2024

Transition to Turkish lira continues in accordance with the targets

7 December 2023 19:18 (UTC+04:00)
Transition to Turkish lira continues in accordance with the targets

Hafize Gaye Erkan, President of the Central Bank of the Republic of Turkiye (CBRT), met with the management of the Banks Association of Turkiye to evaluate the latest situation in the banking sector. At the meeting, the reduction of foreign currency conversion deposits in the banking system, the transition to TL, and the applications for rediscount and YTAK within the scope of the CBRT's support for exports and investment were evaluated. Emphasizing that the transition to the Turkish lira continues in accordance with the targets, Erkan said, "The real sector and markets' belief in the disinflation path is increasing, and there is an improvement in expectations that is starting to be reflected in pricing behavior."

In the statement made by the Association, it was stated that at the meeting, the applications regarding the reduction of foreign currency conversion deposits in the banking system, the transition to Turkish lira (TL), and rediscount and Investment Committed Advance Loans (YTAK) within the scope of the CBRT's support for exports and investment were evaluated.

In the statement, the following was noted:

"The positive outlook of the Turkish lira transition target that came into effect after the measures and the joint proposal study for its continuation, suggestions for the continuation of the healthy functioning of the credit flow compatible with the disinflation target, and evaluations regarding the development of the positive course in export and investment credits together with the CBRT were the main agenda items of the meeting. In addition, an agreement was reached to carry out joint work by creating a framework for the Social Investment Note that is being developed."

The transition to Turkish lira continues in accordance with the targets

In the statement, CBRT President Hafize Gaye Erkan, whose statements were included in the meeting, touched upon the trend in both domestic residents' savings instrument preferences and non-residents' fund flows, and stated that the transition to TL continues in line with the targets.

Erkan stated that they foresee that disinflation will occur in 2024 in line with the path announced in the last Inflation Report, as the cumulative and delayed effects of monetary policy come into play, and noted that the real sector and markets' belief in the disinflation path has increased and an improvement in expectations has begun to be reflected in pricing behavior.

Underlining the importance of determination and coordination in policies, Erkan stated that they welcomed the efforts of the banking sector to support the transition to TL.

Positive results of the applications are seen

TBB Chairman of the Board of Directors Alpaslan Çakar also noted that they found the focus of monetary policy on reducing inflation very valuable and positive.

Emphasizing that the positive results of the practices aimed at further strengthening the economy are being seen, Çakar pointed out that investments and growth continue, the outlook has turned positive, predictability has increased and the risk premium has decreased.

Çakar stated that thanks to the preservation of stability and confidence in the markets, the increase in demand for TL will support the strengthening of the banking sector's contribution to the financing of growth through investment, employment, production, and exports in a balanced and high-quality manner.

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