Photo: AFP
Photo: AFP

Turkish residents have been banned from borrowing in foreign currency from foreign lenders unless they have foreign-currency income to offset it, as of May 2.

International regulatory news monitor Mondaq translated the policy as saying that:

“Turkish individuals are prohibited to obtain any foreign-currency denominated loans and foreign-currency indexed loans from Foreign Lenders”

Banks and finance companies are exempt, which is not surprising, because Turkey finances a substantial part of its current-account deficit through interbank loans. As exchange controls go, the lending restriction is tame, but it shows how worried the Turkish authorities are about the lira’s plunge.

The lira hit an all-time low on Friday, adding to negative headlines, including the S&P Global Ratings downgrade of the currency to BB-/B.