Published On: Mon, Nov 13th, 2017

How will the new tool to be implemented by CBRT for the exchange rate risk work?


The CBRT (Central Bank of Republic of Turkey) will implement a new product to manage the risk of the real sector in the future.  Forward foreign exchange contracts are among the most widely used products in exchange rate risk management. The Central Bank is starting forward foreign exchange transactions (Turkish lira negotiated) in order to manage the risk of the real sector.

  • In the forward currency auction negotiable in TL, the amount and maturity will be announced by the Central Bank of the Republic of Turkey. Tenders will be carried out in traditional multiple price method.
  • Banks which are members of the foreign exchange market will make offers for the currency rate and amount.
  • Unlike the classic forward exchange transactions, there will be no change in the principal amount at the time of transaction or due date.
  • The difference between the determined exchange rate at the maturity date and the actual exchange rate at the maturity date will be handled in Turkish lira.
  • The CBRT’s foreign exchange reserves will not be affected by this transaction as there will be no change in the capital, at due date.
  • Banks that are party to the transaction will present the same transaction to their customers or to different counterparties.

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