The Central Bank of the Republic of Türkiye (TCMB) has published a communiqué in the Official Gazette regarding amendments to the support for converting foreign currency originating from abroad into Turkish Lira. The new regulations aim to increase the effectiveness of this conversion support, which contributes to reserve accumulation.
Under the updated framework, companies will access foreign currency conversion support in proportion to the value they add. This value-added metric is calculated based on a company's profitability and labor costs.
The regulation also introduces mechanisms for intermediate exporters. Once these exporters reach their own value-added-based limits, they can perform foreign currency conversion transactions on behalf of high-value-added suppliers. In such instances, the conversion support will be deposited directly into the supplier's account.
Changes to foreign currency positions
The new rules replace the previous 'commitment not to purchase foreign currency' with a system based on the foreign currency positions of companies receiving support. Companies must ensure their foreign currency positions do not exceed an upper limit to be determined by the TCMB prior to applying for the support.
To ensure the effective implementation of these applications, the intermediary functions of banks have been strengthened.
Implementation and extensions
The changes regarding the foreign currency conversion support are scheduled to be implemented starting October 1. While the previous expiration date for certain temporary applications was July 31, the temporary period for a 3 percent support payment and a 35 percent export proceeds sales obligation has been extended until January 31, 2027.
2%
Basic rate of the foreign currency conversion support
Updates
The specific details regarding the regulation's implementation will be provided in an forthcoming Implementation Instruction. Additionally, the new position-based system is reportedly similar to the existing framework for export and foreign exchange earning services rediscount credits, while unverified claims suggest that additional measures may be introduced to bolster the intermediary roles of banks.
The specific details of the new regulation will be provided in an upcoming Implementation Instruction. Additionally, unverified reports suggest that the Central Bank may introduce further measures to strengthen the intermediary roles of banks in the process.
The specific details of the regulation are set to be included in the Implementation Instruction, while the new foreign currency position-based support system will function similarly to the existing credit system used for export and foreign exchange earning services. Additionally, unverified claims suggest that the Central Bank may introduce further measures to strengthen the intermediary roles of banks during the execution process.
The specific details of the regulation are set to be included in the Implementation Instruction, while the new foreign currency position-based support system will follow a model similar to the one used for export and foreign exchange earning services rediscount credits. Additionally, unverified reports suggest that the Central Bank may introduce further measures to strengthen the intermediary roles of banks in this process.
The new regulation removes the previous requirement for companies to commit to not purchasing foreign currency for one month, replacing the ban with a balance-sheet-based foreign currency position criterion. This change allows small and medium-sized industrial enterprises that do not export directly to enter the system, with support being transferred directly to the supplier company's account. Additionally, İTO President Şekib Avdagiç noted that the framework's similarity to export rediscount credits is expected to reduce compliance costs for firms.
