Economy in Turkey: Foreign Currency Deposits Exceed $200 Billion After 10 Months
Foreign currency deposits in banks have exceeded the $200 billion threshold again after 10 months. The data indicates an increase of approximately $6 billion last week.
After closing last year with a decline due to high interest rates, foreign currency deposits are showing a different trend this year.
Nominally, the total foreign currency deposits in banks decreased by $15 billion last year, but from January 1 to March 6 of this year, they have increased by $14.4 billion.
BDDK (Banking Regulation and Supervision Agency) data shows that during the period from March 1 to 6, foreign currency deposits in banks rose sharply by around $6 billion.
Foreign currency deposits last exceeded the $200 billion mark at the beginning of May 2024, after which they started to decline.
In 2024, due to the increase in interest rates, foreign currency deposits decreased by $17.9 billion when adjusted for exchange rate effects.
Effect of Interest Rates and Uncertainty
The decline in TL (Turkish Lira) deposit interest rates in parallel with the Central Bank of Turkey’s (TCMB) rate cuts, the fall in fund returns, and the rise in geopolitical tensions and global economic uncertainties have all contributed to the resurgence of foreign currency deposits.
The average TL deposit interest rate for the 1-3 month maturity period dropped by over 7 percentage points in the first 8 weeks, from 59.14% to 51.75%. This rate is even lower for low-volume deposits.
However, experts point out that the TCMB is expected to continue its policy of positive real interest rates and a strong Turkish Lira in 2025, suggesting that TL returns may continue to be higher than foreign currency returns.
The USD/TRY exchange rate increased by 1.4% in January and 1.8% in February, while the EUR/TRY exchange rate increased by 1.2% in January and 2.5% in February. These increases remained below official inflation rates.
