The Central Bank of the Republic of Turkey increased the securities holding rate of banks from 5% to 10% as part of its efforts to promote dedollarization. The Central Bank said on Saturday that banks will receive a discounted securities holding rate if their share of TL deposits exceeds 60%. The change will take effect from February 24.
The central bank said on Friday that its top priority is to expand its use by increasing the share of the lira in bank deposits from around 35% a year ago to 60% in the first half of 2023.
We have been monitoring the exchange rate for months as it has remained stable at its current levels. In this environment, the transition from foreign currency and foreign currency indexed FX-protected deposit to TL has been affected. On the regulatory side of this trend, banks are aggressively trying to convert their foreign currency deposits into TL or FX-protected deposit, as bank depositors’ stay in foreign currency creates more penalty points for lenders. The deposit rates applied to achieve this result in the formation of an interest rate corridor that is very wide and separate from the policy rate. The CBRT policy rate is 9%, and the weighted deposit interest rates for up to 3 months are at the level of 24.2% as of the week of 30 December.
The lack of a reasonable fight against inflation caused the TL’s main functions to be transferred to foreign currency in a very short time, causing a rapid increase in FX deposits (including or excluding FX-protected deposit). Although the deposit composition has become volatile, being far from the 5% official inflation target may cause this trend to quickly shift to FX deposits if the exchange rate rises again.
Banking sector TL and FX deposit distribution and policy rate comparison… Source: BRSA, CBRT, Tera Yatırım
Kaynak: Tera Yatırım-Enver Erkan
