RIYADH: In a bid to promote and protect savings, the Turkish central bank has allowed banks to issue short-term maturities for foreign-exchange-protected lira deposit accounts. The moves also aim to limit the use of foreign currency transactions in the country’s banking system. The central bank will determine the maturities of these deposit accounts, which will only be enabled if there is demand for them, it was reported in the official gazette on Saturday. With the introduction of this new rule, the central bank would be able to disregard the three-month minimum maturity that had been formerly in use in the country. The gazette also noted that the modification does not pertain to deposits converted from standard lira deposits paid by the Treasury. The decree also highlighted that there is no immediate change in the maturities. As the third change in FX-protected lira deposit accounts in the past week, this step added additional pressure on banks in an effort to stabilize the lira. Turkiye permitted companies with FX liabilities to open FX-protected lira deposit one-month maturity accounts on March 30. In addition, the central bank allowed banks to set interest rates freely for FX-protected lira deposit accounts last Friday. S&P downgrades Turkey’s outlook International credit rating agency S&P updated its outlook for Turkiye from stable to negative due to vulnerabilities in the economy but kept the country’s sovereign credit rating at B. The agency noted that these vulnerabilities stem from low policy rates and directed lending and regulatory control on its foreign currency positions and interest rates. Turkiye has faced a series of obstacles that played a part in its demotion — the earthquake in February which drew in recovery costs, and the continued surging inflation levels. Reconstruction operations require internal and external financing amounting to 12 percent of the nation’s gross domestic product. On Feb. 23, the central bank reduced its main interest rate to 8.5 percent to soften the impact of the earthquake. “Given Turkiye’s elevated current account deficits, limited usable reserves, high inflation, and reliance on occasional capital inflows, the outlook for the exchange rate remains, at best, uncertain,” S&P said in a statement. The country’s credit rating has not been downgraded since September last year when it dropped over concerns about the country’s ultra-accommodative monetary policy. Two other agencies, Moody’s Investors Service and Fitch Ratings, have also downgraded Turkiye’s credit rating on the threat of balance-of-payments risks and rising inflation concerns respectively.