Sharp fall in Turkish FX deposits

According to the weekly money and bank statistics announced by the Central Bank, in the week ending November 25, the foreign currency deposits of domestic residents decreased by 5 billion 534 million dollars, adjusted for the parity effect, and 1 billion 940 million dollars of this was due to the decrease in foreign currency deposits belonging to domestic real persons.

The decrease in foreign currency deposits of legal entities was 3 billion 594 million dollars. IMF defined net international reserves increased by $759 million in the week of November 25 to $19 billion 504 million, marking the highest level since the week of February 18.

The total reserves of the Central Bank decreased to 122 billion 601 million dollars in the week of November 25, with a decrease of 284 million dollars compared to the previous week.

The last time such a sharp decline in foreign currency deposits took place during the week of February 18, when legal entities were heavily involved in currency-protected deposits.

Economist Hayri Kozanoglu said on Twitter that the fall may be a result of a state-backed-deposit scheme that protects depositors from currency crash and the new trend to buy stock shares.

Turkey's central bank has set-up a reserve-management system to stabilize the lira currency ahead of elections in 2023 with nearly 100 new regulations this year.

The policy, adopted in the wake of a historic currency crash a year ago, relies largely on foreign funds obtained from export revenues, foreign homebuyers and other sources to finely balance the market's supply and demand.