CBRT: FX-protected lira deposit targets for banks rise

According to the decision published in the Official Gazette, the Central Bank of the Republic of Turkey said that by introducing an additional conversion target for banks, they should shift more foreign currency to their foreign currency-protected lira deposit accounts.

According to the decision published in the Official Gazette, the Central Bank of the Republic of Turkey said that by introducing an additional conversion target for banks, they should shift more foreign currency to their foreign currency-protected lira deposit accounts. According to this;

·        Banks are required to purchase low-yield government bonds if they fail to meet an additional 10% conversion target each month from May 26 to July 28.

·        After July 28, banks will have to hold additional bonds if they do not meet the 30% conversion target by then.

·        The regulation only applies to private accounts, and small banks are exempt from the new rule.

Currency Protected TL Deposit and Participation Accounts (TRY) [TP] [Sector]… Source: BRSA, Dinamik Yatırım

KKM interest rates will increase even more. Since it is both a high return opportunity and a guaranteed instrument against foreign currency, we can think that investor tendency will be directed here. If we consider that the main reason for the October-December 2022 stock market rally is that there is no return opportunity anywhere, and if we consider that alternative income opportunities to the stock market on the deposit side, it is negative for the stock market. In an environment where the stock market is also insecure after the election, we may see a serious money shift to KKMs, whose interest rates will increase.

Enver Erkan / Dinamik Yatırım