Turkey central bank extends maturities for currency swaps

Turkey’s central bank said it will extend the maturities in lira swap auctions to up to six months.

Auctions will now be held with one, three and six-month maturities, the central bank said in a statement on its website on Monday. It previously conducted swaps maturing in one week.

The measure was aimed at “enhancing flexibility in Turkish lira and FX liquidity management,” the central bank said.

Cross-currency swaps conducted by the central bank have come under the spotlight in recent months. The bank has increased the amount of swaps it holds as foreign currency reserves, raising concern among investors and economists about the real level of its reserves, which are used to defend the lira in times of market volatility.

The auctions will be held in the Turkish Lira Currency Swap Market, which opened on Aug. 31 last year. Transaction limits for banks in the market will remain unchanged, the central bank said.

Turkey's economy is tentatively recovering from a currency crisis last year that saw the lira plummet to record lows, sparking a recession.