Currency protection is getting heavier
of the banks The fact that the gap between the buy-sell quotes of the exchange rate reaches 5 percent with the suggestion of the Central Bank (CBRT), triggers the demand for Currency Protected Deposits (KKM) from savers who want to escape from the TL.
The removal of the interest cap on the CBRT-backed KKM in January and the Treasury-backed KKM in March also made currency protection attractive. KKM’s deposit size, which has increased by 565 billion since the beginning of the year, approached 2 trillion lira ($102.3 billion) in the week of April 21. However, economists say that the interest that banks give to KKM increases; They claim that the positive effect of the huge burden on CBRT and the Treasury will be limited.
THE ACCOUNTS WILL BE DIFFICULT
On the contrary, the calculations will become a bit more difficult since the expiration date is much more frequent in KKM. Bankers anticipate that there will be significant redemptions from KKM every week in the coming period. According to information provided by a senior private sector banker who spoke to Reuters, the KKM redemption, which must be renewed every week in the first place, will reach $10 billion. Four bankers, whose calculations were referred to by Reuters, estimate that $8 billion will be repaid this week, $6 billion next week and $11-12 billion in the week after the election.
IMPACT DESTROYING
As of April, one fifth of the total deposits consisted of KKM, and the interest limit was exceeded.
Stating that the abolition of CBRT will not have a positive effect on the burden on CBRT and the Treasury, Prof. Dr. Binhan Elif Yılmaz said, “The difference between the CBRT rate and the free market rate and thus , the demand for foreign exchange is high and this increases the burden of KKM on the budget. The increase in the exchange rate that accompanies the increase in the volume of KKM will create a burden for the CBRT and the Treasury.
Economist Murat Kubilay, on the other hand, pointed out that with a KKM volume of 102 billion dollars, an increase of 1 TL in the exchange rate will cause a loss of 2 to 4 billion dollars, and stated that if the exchange rate rises for whatever reason, the effect on the budget will be devastating.
Foreign currency assets reached 330 billion dollars
Former Central Bank Chief Economist (CBRT) Prof. Dr. Noting that dollarization is not just about foreign currency deposits, Hakan Kara drew attention to the size of the true picture when all foreign currencies are taken into account and foreign currency indexed assets of domestic residents. In his social media post, Kara stated that foreign currency assets, which were $254 billion when KKM started, hit $330 billion last week. “Where’s the lyraization in that?” Kara said: “We couldn’t include foreign currency and gold, which were hidden under the pillow, in this account, as there was no data. It is likely that these have increased in the last period as well, ”he said.