The move will provide Turkish banks with an additional $2.2 billion.
The Central Bank of Turkey (CBRT) has modified its reserves rules to free up commercial lenders’ foreign-exchange in an attempt to support the sinking currency.
The bank said it was lowering the maximum amount of foreign currency lenders can park at the regulator as part of their required reserves.
The development came after the lira lost 2.3 per cent of its value against the US dollar.
Modifying reserve requirements is usually one of the first things Turkey’s central bank resorts to in order to prop up the currency
The use of such a marginal tool shows its hand is weak, according Brown Brothers Harriman strategist Win Thin.
“This is chump change and the fact that this is all they can do while the lira is in free-fall is quite disappointing,” added Thin.
The lira trimmed some of its losses after the announcement and was trading 1.8 per cent lower at 5.17 points to US dollar.