Turkey: Rapid decline in foreign currency deposits

According to the weekly data released by the Central Bank of the Republic of Turkey, total foreign currency deposits decreased by 7.80 billion dollars in the week of February 18, adjusted for the parity effect. Compared to the previous week, foreign currency deposits of resident real persons decreased by 767 million dollars, while foreign currency deposits of domestic legal entities decreased by 7.03 billion dollars.


The decline in the last week came from the corporate side. In the given week, the foreign exchange accounts of domestic residents decreased from 223 billion dollars to 215.99 billion dollars. According to the data, corporate FX deposits fell from $82 billion to $74.9 billion on February 18, while retail deposits remained flat at $141 billion. It is estimated that the conversion from FX to TRY comes entirely from institutional investors and is due to the use of FX-linked deposit.


During the periods when the CBRT cut rates, especially in the Covid-19 crisis, the foreign exchange demand that occurred when it applied to seriously encourage loans caused an increase in dollarization rates, and it was seen that the foreign exchange movement constantly reacted. Although this trend seems to stabilize in interest rates that were increased for a short time after November 2020, it has been observed that the dollarization has settled above 60% since the practice of keeping TRY interest rates low within the scope of the new economy perspective has been implemented recently.


At the current level, the currency-protected deposit product has been introduced in order to avoid the inflationary effects of the exchange rate increase and to absorb the shock effects it may create on the economy. The financial dollarization rate is at the level of 56.92% as of the week of February 18, we see a slight decrease from the rate that was 58.74% in the previous week. This rate was at the level of 54.7% in the same period of the previous year.

Kaynak Tera Yatırım
Hibya Haber Ajansı

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