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Editor in Chief Mohamed Wadie

Turkey Raises Rates on Credit Card Cash Withdrawals to 5%

Sun 17 Mar 2024 | 06:04 AM
Turkish Lira
Turkish Lira
Taarek Refaat

The Turkish Central Bank announced new measures to reduce spending on credit cards and reduce demand for foreign currencies ahead of local elections at the end of the month.

The central bank has raised the monthly interest on borrowing cash from credit cards, from 4.42% to 5%, according to a notice published in the Official Gazette at midnight. 

State-owned Anadolu Agency reported that the bank separately raised monthly targets for lenders to increase the share of deposits in lira.

The lira witnessed increasing volatility before the elections in two weeks, although monetary policy makers see the demand for the US dollar as temporary, and expect it to ease after the vote. The lira is the weakest performing among emerging market currencies tracked by Bloomberg this month, losing about 2.8% against the dollar.

The central bank is also under pressure to raise its benchmark interest rate after inflation accelerated more in February than analysts had expected. The bank expects inflation to peak at more than 70% in the coming months before slowing to 36% at the end of the year.

After announcing the completion of its eight-month monetary tightening cycle and raising interest rates to 45%, the central bank chose to use alternative tightening methods to curb inflation, sometimes issuing rules at midnight.

(1 U.S. Dollar = 32.09 Turkish lira)

Turkish Lira