ISTANBUL (Reuters) – Restructured foreign currency loans in Turkey will be converted to Turkish lira at the central bank exchange rate in force on the day of restructure, a presidential decree said on Thursday, a move that could damage banks if the lira continues to fall against the dollar.
The decree published in the Official Gazette allowed the day’s lira rate to be used in companies’ restructuring of forex loans as private sector debt continues to grow.
Earlier this week, Turkey’s TBB banking lobby called on its members to allow corporate borrowers to restructure some short-term foreign currency loans, a move that would potentially throw a lifeline to debt-burdened companies hit by the country’s currency crisis.
Turkey’s lira has lost around 40 percent of its value against the dollar this year on concerns over President Tayyip Erdogan’s grip on monetary policy and a row between Ankara and Washington.
Reporting by Ali Kucukgocmen; Editing by Ece Toksabay and Eric Meijer