Turkish companies, including exporters and tourism firms that bring in foreign currency from abroad, will be offered foreign exchange conversion support by the country's central bank, according to a statement by the monetary authority on Thursday.
Firms will be provided support corresponding to 2% of the foreign exchange they repatriate from abroad and convert into Turkish lira after selling it to the Central Bank of the Republic of Türkiye (CBRT), it said.
The mechanism will apply to firms that commit not to buy foreign currency for a period determined by the bank and deposit the remaining amount to conversion accounts as part of a scheme to protect lira deposits against foreign exchange depreciation, according to the authority.
The move comes as exporters have complained that the lira is "overvalued," which threatens their competitiveness abroad.
Exporters must sell 40% of their earnings abroad to the central bank. Under the new mechanism, they will now benefit from a preferential exchange rate by depositing the remaining 60% of their foreign proceeds accounts as part of the scheme in which the state protects lira deposits from depreciation.
Analysts have voiced concern that the practice could create a different foreign exchange conversion rate to the trading rate in the free market.
CBRT Governor Şahap Kavcıoğlu dismissed this criticism when asked about it at a presentation on Thursday.
"We don't have a dual foreign exchange rate; we are just encouraging foreign currency resources from abroad ... I do not agree with this interpretation of the practice," Kavcıoğlu said.
"There is no different foreign exchange rate application in Türkiye; the FX rates at the banks are the same to the exporters," he added.
As part of its so-called liraization strategy, the central bank has taken several measures to revive interest in the currency after steep depreciation, and high and volatile inflation prompted Turks to seek safer places for their savings.
These steps and the Turkish lira's stability in the last several months helped cut the share of foreign currencies to around 46% of total bank deposits compared to some 65% a year ago.
The latest steps are expected to ensure a stable course in foreign exchange rates.
Max rate limit on FX-protected accounts ditched.
Last week, the central bank set the remuneration rate on foreign currency-free reserve accounts at 4.5%, establishing a remuneration rate for lenders who hold foreign exchange-free reserve accounts in the country.
Separately, the central bank on Thursday removed a 12% maximum interest rate limit that had been in place in the foreign exchange-protected lira savings scheme, according to a document sent to banks.
The move aims to attract more foreign exchange holders to turn to the national currency with higher rates.
Before the letter, the maximum limit for the depreciation-protected deposits was set at the current central bank policy rate of 9% plus 3%.
The scheme that sought to discourage foreign exchange use was unveiled in late 2021, aiming at protecting lira deposits from depreciation versus hard currencies.
The initiative sought to curb demand by compensating depositors for lira losses against foreign currencies. The lira had depreciated some 44% against the U.S. dollar in 2021 and nearly 30% in 2022 but remained stable in the last quarter.
According to official data, the budget payments into the state-backed scheme, known by its acronym KKM, reached TL 92.5 billion in 2022. The project had attracted around TL 1.4 trillion in total, Treasury and Finance Nureddin Nebati said earlier this month.