Turkey: FX-protected accounts near $122 billion as currency crisis continues

The volume of foreign currency protected deposit accounts in Turkey rose to over 3.28 trillion lira (close to $122 billion) following a record increase of 150 billion lira (approx. $5.5 billion) in the week of 4 August, according to data provided by the Banking Regulation and Supervision Authority (BDDK).

The scheme was introduced late 2021 to stop the flight from Turkish lira amid a currency crisis and to slow down lira's depreciation against dollar and euro. Holders of FX protected accounts are paid an interest rate on top of compensation for the lira's loss against reserve currencies, and the funds for the compensation is provided by the Treasury.

The scheme further increases the burden on the Treasury that is striving to narrow down a deficit.

The budget deficit for the first half of 2023 was 483 billion lira (approx. $17.8 billion), compared to a surplus of 93.6 billion lira in the first half of 2022.