Turkish investors have begun to abandon the use of a mechanism designed to stop the sale of the local currency, and have begun to transfer their funds to regular accounts in dollars, which is putting pressure on the central bank in the face of increased demand for foreign currency.
agency quotes”bloombergAccording to an informed source, the Turkish depositors withdrew about $5 billion from accounts known as “KKM” or the foreign currency-protected deposit account in which the account is in Turkish lira, with the Central Bank guaranteeing to compensate depositors for any difference in currencies in the future, while giving them generous interest rates. .
This shift came in the wake of the announcement by the authorities responsible for monetary policies in Turkey of a series of changes to encourage commercial banks to enable their clients to exit the “KKM” mechanism that the Central Bank announced to stop working with, after it started in 2021 with the aim of preventing the decline of the local currency.
The source told Bloomberg that the money that was withdrawn belonged to investors who already had savings in dollars and returned to their regular accounts last week.
After the collapse of the Turkish lira… Erdogan faces difficult choices
After the collapse of the Turkish lira… Erdogan faces difficult choices
The source did not want to reveal his identity because the data was not yet allowed to be disclosed publicly, and added that, on the other hand, the volume of deposits entering the mechanism was less than those leaving it during the same period, which reduced the volume of amounts in the mechanism by about $5 billion, which is the first change of its kind since last January.
The agency indicated that the Central Bank of Turkey refused to comment on the matter.
The Turkish Central Bank revealed, on Thursday, that annual inflation is likely to hover near 62 percent at the end of 2023, which is the upper end of the bank’s forecast range in its latest inflation report, according to Reuters.
The bank added that annual inflation will increase sharply in August, in the minutes of last week’s Monetary Policy Committee meeting. He raised interest rates by 750 basis points to 25 percent during the committee meeting.
The Turkish central bank raises interest
The Turkish Central Bank raised the interest rate to 25 percent, in a surprising move that constitutes a turning point in the unconventional economic policy of Turkish President Recep Tayyip Erdogan.
The central bank reiterated that monetary tightening will gradually increase as necessary, adding that reducing the inflation rate will begin in 2024.
The Turkish lira fell by 2.8 percent last week, one day after the central bank raised interest rates dramatically.
The lira hit a record low of 27.2350 per dollar shortly before the decision to raise interest rates was announced on August 24.
2023-09-01 14:22:29
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