When the interest cap was removed, TL 1 trillion went into exchange rate protection.

Currency Protected Deposit (KKM) accounts, which bore the heavy lifting of the banking sector, increased to 2 trillion 398 billion 169 million lira ($121.3 billion) as of May 18, while the weekly increase was 51.4 billion lira. According to data from the Banking Regulation and Supervision Agency (BDDK), the increase in KKM accounts has continued uninterrupted since January 26, when the interest ceiling on Central Bank liabilities was removed. In the 16 weeks in question, an increase of 991.32 billion lire was observed in the volume of KKM. The interest ceiling, which was ‘policy interest plus 3 points’ on KKM, was removed at the end of January 2023 for foreign currency converted products, and at the end of March 2023 for TL and KKM conversion products with a maturity de 1 month was introduced for companies with currency deficit. With the abolition of the interest limit, the banks entered a fast race. While interest in KKM increased with rising interest rates, the Central Bank went a step further. After May 14, additional foreign currency conversion obligations to TL were increased. Therefore, as the transition to KKM accounts accelerated, banks began to increase not only interest but also premiums to drive their customers to more KKM and increase the attractiveness of the product.

THE ADVANCED BONUS IS ATTRACTIVE

Foreign currency KKM ‘cash premium’ interest rates, which were at 20-25 percent levels last week, are seen at 36-40 percent levels this week. Thanks to the cash bonus, for example, a 10 percent bonus dollar is immediately deposited into the client’s account with a maturity of 3 months. After 3 months, TL interest or exchange protection difference is given separately, depending on the exchange rate. Considering the KKM, which economists consider foreign currency deposits because they are indexed to foreign currency, and foreign currency deposits, their share of total deposits reached 63.27 percent. Since December 2020, when KKM went live, an increase of $90 billion in foreign currency and foreign currency-indexed assets is estimated.

$1 billion in sales in gold accounts

While total foreign currency deposits in banks were $217.24 billion last week, $183 billion of that amount was collected in resident accounts. The total deposits in foreign currency of residents in the country decreased by 1 trillion 671 million dollars as of May 18, adjusted for the parity effect. All this decrease occurred in real person, that is, individual accounts. In the week of May 18, when gold grams peaked, sales of $1.74 billion were observed from individual precious metals currency accounts.