In an effort to deter local banks from looking for cheap lira on offshore markets, Turkey’s central bank increased the reserve requirement ratios on banks’ short-term obligations overseas.

Early on Saturday, the bank increased the reserve requirement ratio to 18% for funds with one-month maturities denominated in lira from repo transactions and foreign loans, and to 14% for funds with three-month maturities. In the past, the reserve requirement ratio for repo transactions and foreign loans with maturities as long as one year was 12%.

To obtain cheaper lira cash overseas, Turkish banks can use offshore repo transactions and loans.

The Turkish currency’s forward implied yield for the following day dropped precipitously following central bank Governor Fatih Karahan’s hawkish tone in his quarterly presentation on inflation on Thursday, indicating a surplus of lira liquidity in offshore markets. Although it regularly used its overnight lending window at 49% in May, the central bank’s policy rate is 46%.

According to Alp Serbetli, a director at ICBC Turkey Yatirim, the central bank is taking steps to show its strict position whenever possible because it doesn’t want interest rates to drop through any avenue, including when banks get low-cost loans in offshore markets.

In order to guarantee that its interest rates are smoothly reflected in the banking system, the monetary authority may occasionally make adjustments to liquidity. In order to restore liquidity in domestic markets, the bank also conducted a 50 billion lira ($1.28 billion) lira deposit auction on Friday.

With Karahan promising to take “whatever is needed” to curb price pressures, the central bank upheld its year-end inflation projection of 24% on Thursday. “There is still a risk of inflation,” he continued.

According to the most recent figures, Turkey’s inflation rate increased 37.9% year over year in April, seemingly halting a nearly year-long decrease.