Dual currency risk

Center In contrast to the 8.5 percent policy rate of the Central Bank of Turkey (CBRT), TL’s deposit interest rate reached its highest in 20 years with the removal of the maximum interest rate on protected deposits in currency (KKM). While the average interest rate for deposits with a maturity of up to 3 months was 29.3 percent, the interest rate granted by banks to TL deposits with high volumes was close to 35 percent. On the exchange rate side, differences of up to 40-50 cents are observed between the prices of currencies between the Grand Bazaar and the banks.

On the other hand, the CBRT sent an instruction to the banks so that they “buy dollars at a higher rate from those who have surpluses.” With this extraordinary step, the doors of the ‘multiple exchange rate’ period were opened, which is a method used by countries with restrictions in the exchange rate regime. Again, with the instruction of the Central Bank, the banks significantly increased the difference between the purchase and sale prices of currencies. Economists point out that the damage caused by the danger of ‘double exchange rate and double interest’ in the market is growing.

PERFECT STORM SIGN

IYI Party Development Policy Chairman Ümit Özlale criticized the process on his Twitter account: “How do you know when the perfect storm is coming in the forex market? Looking at the spread between the spot market and the Great Bazaar! The margin, which was 1 percent last week, is now going towards 2.5-3 percent,” he said. Özlale said: “Due to the price change in the Grand Bazaar, some banks have closed the transaction there. As such, the margin between the spot market and the Grand Bazaar is growing. This is not surprising. The result of ignorance in managing the economy could result in an unprecedented crisis.”

Current account deficit fuels demand for foreign exchange

Calling attention to ‘multiple interest’ in the markets, economist Güldem Atabay said that while private banks do not provide low-interest loans to businesses, they raise interest rates on consumer loans at the expense of holding bonds. , while public banks take risks and grant loans by adding capital from the pocket of citizens. Stating that the abolition of the Protected Currency Deposit interest ceiling was not enough to keep the rate dry, Atabay said: “In the balance of payments announced the day before, the annual current account deficit broke a record at $55.4 billion. . The new economic model shit has restored capital inflows. The current account deficit is fueling the demand for foreign exchange,” he said.