Turkey turns to exporters to support the lira. Will the latest solutions work?

Turkey will require exporters to convert a quarter of their revenue in lira, the latest step in the government’s efforts to increase its reserves and strengthen the local currency.

Monetary authorities said Monday in a decree that the central bank will purchase 25% of the total income from exports of goods on condition that exporters receive payments in dollars, euros or pounds.

The measure aims to strengthen Turkey’s foreign exchange reserves by forcing companies to withhold some of their revenues from overseas sales in local currency.

This comes after a year of heavy losses in the Turkish lira, which lost almost half its value against the dollar last year. in coinciding with Turkish President Recep Tayyip Erdogan’s requests to the central bank to lower the benchmark interest rate.

The lira fell 0.3% to trade at 13.3430 lira / dollar, and losses over the past year extended to just over 44%, the largest decline of its kind among the major currencies charted by Bloomberg.

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