TURKISH LIRA INTEREST RATES
Central bank: tcmb | Type: decision | Date: 2005-12-30

No: 2005 -46
30 December 2005
PRESS RELEASE
THE CBRT FOREIGN EXCHANGE BUYING AUCTIONS FOR 2006 AND NEW
TURKISH LIRA INTEREST RATES
The CBRT announced the general framework of the exchange rate policy, foreign
exchange buying auctions and liquidity management to be adopted in 2006 with the press
release No. 2005 -56 entitled “General Framework of Inflation Targeting Regime and
Monetary and Exchange Rate Policy for 2006” on 5 December 2006. It would be useful to
reiterate the following points about “Guidelines for Foreign Exchange Buying Auctions” and
the changes to be made in the “Central Bank Short -Term Interest Rates” to be entered into
effect as of 2 January 2005:
Foreign Exchange Buying Auctions
1) Guidelines for foreign exchange buying auctions to be held in 2006 are as follows:
a) The total daily amount of auctions is determined as USD 20 million for 2006.
b) Auctions will not be held on public holidays of the United States, even if it is a
working day in T urkey. Neither will auctions be held on half working days or if
when the Central Bank has started to directly intervene in foreign exchange market
prior to auction hours. In this framework, auctions will start on 3 January 2006,
since the date of 2 January 2006 will be holiday in the United States.
c) The additional optional selling amount priced over the average price of the auction
will only be granted to the winner parties. The optional amount will be 200 percent
of the total amount sold in the auction by e ach bank. Accordingly, the maximum
daily amount that can be bought will be USD 60 million, with USD 20 million of
auction amount and USD 40 million of optional selling amount.
d) The auction number will be posted on Reuters page CBTQ at 1.30 p.m. and
institutions may bid between 1.30 – 1.45 p.m.
e) After the auction results are posted on the CBTQ page of Reuters, the institutions
may exercise their right to sell the optional amount till 2.00 p.m.
f) The other rules for the foreign exchange buying auctions remain the same and will
continue to be applied as before.
g) The CBRT may, with a prior notice, suspend the auctions temporarily when the
depth of the foreign exchange market is lost due to serious exogenous shocks or
unforeseen extraordinary developments, and when the resulting excessive volatility
in exchange rates and unhealthy price formation are observed.
YTL Interest Rates
2) Within the framework of the technical interest rate arrangements, the short -term interest
rates to be applied at the CBRT Interbank Money Market and at the Istanbul Stock Exchange
Repo-Reverse Repo Market starting from 2 January 2006 will be as follows:
a) Overnight Interest Rates: While the borrowing interest rate of 13.50
percent is kept unchanged, the l ending interest rate is lowered to 16.50
percent from 17.50 percent.
b) Other Maturities: The one-week borrowing interest rate will no longer be
announced.
c) Late Liquidity Window Interest Rates: Within the framework of the Late
Liquidity Window Facility, the CBRT overnight borrowing interest rate
applicable between 16:00 – 16:30 hours at Interbank Money Market is
increased to 9.50 percent from 5 percent, while lending interest rate is
lowered to 19.50 percent from 21.50 percent.
d) The interest rates applicabl e to overnight and one -week maturity borrowing
facilities provided for primary dealer banks via repo transactions within the
framework of open market transactions remain the same as 15.50 percent.
3) As was stated in the Press Release dated December 5, 2 005, with these changes of interest
rates, the Central Bank did not intend to make any change in interest rates by considering the
inflation target. It has to do with only the technical arrangements intended at narrowing the
potential volatility margins of the overnight interest rates. Therefore, the interest rate for daily
borrowing transactions, which is determined as a benchmark interest rate under excess
liquidity conditions, has been kept unchanged.