About the BRSA swap move

The Banking Regulation and Supervision Agency limited the transaction amount to 1% of the bank's calculated equity in swaps, futures, options and derivative transactions made by foreigners from Turkish banks.

The Banking Regulation and Supervision Agency limited the transaction amount to 1% of the bank's calculated equity in swaps, futures, options and derivative transactions made by foreigners from Turkish banks. According to the decision, it was decided to redefine the limitation, which was previously set at 10% of the shareholders' equity, for transactions to be carried out in the direction of TRY purchase. Limits of 1%, 2% and 10% are determined for 7 days, 30 days and 1-year maturities, respectively, in transactions in the direction of TRY sales. The closing of transactions before the maturity date will be subject to the approval of the Board.

 

The decision aims to limit speculative attacks and short selling in TRY, as in previous swap limit regulations. It prevents foreigners from buying USD by using the TRY they receive from their swap transactions with Turkish banks. In other words, it is aimed that the foreigner cannot find TRY to sell in the market. This move, which aims to prevent exchange rate volatility, may in theory have a downward effect for the exchange rate, but in this case, the foreigner may sell stock to find TRY.

Source: Tera Menkul
Hibya News Agency

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