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Turkey imposes new FX restrictions

September 2018

Turkey expands the FX restrictions recently put in place, adding limitations on the ability to select FX as a currency of contracts between Turkish residents. Yesterday, the Turkish government amended Decree No. 32 on the Protection of the Value of the Turkish Currency ("Decree No. 32") with a presidential decree which enters into force today (13 September 2018). From now on, the transactions under following contract types must be in Turkish lira:

• sale and purchase contracts for any types of assets;

• lease contracts (including financial leasing);

• employment contracts;

• manufacturing, construction, production or other similar contracts; and

• services contracts.

These new rules only apply when the transaction is between Turkish residents. Further, the existing contracts falling within the scope of this restriction must be amended and the considerations must be converted into Turkish Lira within 30 days from 13 September 2018.

The presidential decree also authorises the Ministry of Treasury and Finance ("MoTF") to issue exemptions and clarifications to this rule, which are expected to be published soon. We recommend all investors closely monitor the upcoming legislative changes and the exemptions to be announced by the MoTF.