According to the statement made by the Central Bank of the Republic of Turkey, banks now have to convert 40% of the foreign currency that residents of Turkey earn from services such as tourism, health and construction and send back to their countries. Previously, only export earnings were subject to the rule. While exporters have to convert their foreign exchange earnings, the return of service sector earnings is still discretionary.
The central bank had increased the conversion rate of export revenues from 25% to 40% on Friday. In order to support the country's foreign exchange reserves, the foreign currency earned by the service sector has also been added to the list that needs to be replaced with the central bank. This conversion may be in foreign currency sold to banks.
Economic management and the Central bank follow policies other than raising interest rates to help protect foreign exchange reserves in an environment of over 60% inflation. In terms of tourism revenues; It is understood that the Central Bank wants to support the foreign exchange reserves with the tourism input that is expected to increase after the April-May period. As it is known here, a significant income is expected from our main tourism locations in the post-Covid recovery and relaxation of travel restrictions, but the recent Russia-Ukraine crisis will cause the restriction of tourism originating from the CIS.
The Central Bank rate will be used in these cycles for both exporters and service providers. More attention should be paid to the exchange rate and maturity mismatch. In terms of creating resources for central bank reserves, there will be an increase in gross reserves.
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