Central Bank launches new era in foreign exchange conversion support practice
The CBRT modified the incentive for converting companies' foreign exchange revenues from abroad into Turkish liras; the commitment was removed, and a position condition and upper limit were introduced.
The Central Bank of the Republic of Turkey announced the new implementation instruction by making comprehensive changes to the mechanism promoting the conversion of foreign exchange revenues from abroad into Turkish liras.
Purpose of the Regulation
Minister of Treasury and Finance Mehmet Şimşek stated that new steps were taken to increase the effectiveness of the CBRT foreign exchange conversion support practice.
In the statement, it was noted that the new regulation aims to make the support mechanism more inclusive and compatible with the actual economic activities of companies.
New Conditions and Instruction
With the new implementation instruction published by the CBRT and entering into force on October 1, flexible and simple conditions were adopted in the system.
Access to the support mechanism was facilitated for companies contributing to exports through production and supply.
Removed and Introduced Rules
In the new period, the previously applied commitment not to purchase foreign exchange was completely removed, while a foreign exchange position condition was introduced for companies instead.
The amount of foreign exchange that can be sold within the scope of the support was associated with value added, and an upper limit was added to the total support amount.
Liquid Foreign Exchange Asset Ratio
It was made mandatory for companies wishing to benefit from the support that the ratio of their liquid foreign exchange assets to net sales revenue or asset size does not exceed the level of 10 percent.
This ratio criterion will be applied as a fundamental measure in the application processes of companies and their eligibility to benefit from the support.
Suppliers and Bank Commission
Supplier companies using intermediary exporters obtained the opportunity to benefit from the support mechanism to the extent of their own limits.
While the duties and responsibilities of intermediary banks were increased, banks were granted the right to receive a commission of a maximum of 1 percent over the support amount from companies.