Economy in Turkey: “Wait and see” period in financial markets
As the discussions of the presidential 1st round and parliamentary elections that took place last weekend in Turkey continue, the markets are locked in the 2nd round to be held on 28 May.
When we take a quick look at what happened in the markets right after the first round we see the following: Just before the election on May 14, the activity in the foreign exchange and gold markets was remarkable. In particular, it was noted that individual investors made demands with the expectation that gold and foreign exchange prices would rise after the election. After the first round of elections, there was a serious slowdown in demand. Foreign exchange and gold prices declined. Before the election, it was seen that the US dollar, which was over 22 TL in the free market for a while, was withdrawn to 20 TL. The price of gram gold also fell from 1,515 TL to 1,370 TL. It is noted that foreign markets also had an impact on the decline in gold prices.
CURRENCY PROTECTED DEPOSIT ACCOUNTS MAJOR PROBLEM IN ECONOMY
The biggest uncertainty in the foreign exchange market in the coming period is the future of Currency Protected Deposit (KKM) accounts. According to BDDK data, as of May 5, the volume of KKM exceeded 2.2 trillion liras and rose to 113 billion 150 million dollars. The renewal of KKM accounts, which exceed 20 percent of the 10.4 trillion lira deposits in banks, will end on December 31, 2023, unless a new decision is taken. It is not difficult to predict that there will be sharp rises if the money in these accounts is directed to the foreign exchange market.
POLICIES TO BE DETERMINED BY THE NEW ADMINISTRATION TO COME
However, the policies to be determined by the new government that will be formed after the second round of elections in the economy will also determine the future of the KKM accounts. It is pointed out that if an economic policy is adopted in the new period, the said accounts may also turn to alternative markets with the expectation of stability. It is also stated that new arrangements can be made to gradually abandon the KKM and to prevent the source here from turning to foreign currency. How the new government will be shaped, who will be the ministers behind the wheel of the economy is a matter of curiosity. It is also believed that the interest policy to be followed will be effective in the course of the foreign exchange market. In addition, the attitude of foreign investors will be decisive.
