Turkish lenders swung between gains and losses in Istanbul trading on Monday as investors weighed the impact of the central bank taking its first step to curb a deposit tool put in place in late 2021 to support the currency. Bonds rallied.

The Borsa Istanbul Banks Index, which tracks the shares of Turkey’s listed lenders, fluctuated between losses of much as 5.4% and gains of as much as 1.8% on Monday. The gauge was trading 0.2% higher as of 5:30pm in Turkey’s financial center.

The lira was down 0.2% to 27.1639 per dollar. The yield on Turkey’s 10-year government bonds fell 95 basis points to 21.10%, the biggest drop since May.

Via a regulation introduced over the weekend, the central bank aims to reduce Turks’ reliance on FX-linked deposit accounts and compel banks that fail to meet specific conversion targets into regular lira accounts to purchase additional government bonds.

MORE: Lira Lifesaver Became $124 Billion Gamble That Now Haunts Turkey

The monetary authority also boosted the reserve requirement ratios for short-term FX deposits, which will force banks to park more foreign currency at the regulator.

Although the changes will likely lead to an increase in lira deposit rates, the ambiguity on credit rate limits makes it hard to calculate the impact on bank profits at this point, said Ibrahim Aksoy, the chief economist of HSBC Asset Management Turkey, in a note. “Further clarity on the implication of the new rule is needed to calculate the impact on bank shares,” he said.

In a teleconference on Monday, commercial lenders voiced their concerns to top officials from Turkey’s central bank, people familiar with the matter said, asking not to be identified as the meeting wasn’t public.

Read more on Turkish Banks Warn of Risks in Plan to Curb Lira Protection Tool

The change follows a pivot by Turkish President Recep Tayyip Erdogan from his unorthodox views on inflation and interest rates after winning a crucial election in May.

He appointed former Merrill Lynch strategist Mehmet Simsek as finance minister and Hafize Gaye Erkan, a former First Republic Bank co-head, as governor of the central bank, which raised interest rates for the first time in over two years in June. The benchmark rate is expected to rise again to 20% from 17.5% on Aug. 24, according to a Bloomberg survey.

--With assistance from Taylan Bilgic.

(Updates moves to show bank reversed losses; adds detail of banks’ teleconference with central bank)