Turkey Deposit Rates High Enough for Switch to Liras, Akbank Says – BNN Bloomberg

(Bloomberg) — The interest rates Turkish banks offer on deposits are high enough to encourage savers to switch from foreign currency to liras, the head of the country’s third-biggest private bank said, in a boost to government efforts to phase out FX-linked accounts.

The central bank’s decision last week to pay interest on some portions of required reserves helped push up rates, Kaan Gur, chief executive officer of Istanbul-based Akbank, said at a press conference in Istanbul.

The weighted average rate for lira deposits of up to three months – which most savers prefer – rose to 51% as of Feb. 2 from 49.6% a week earlier, according to data compiled by Bloomberg.

“This environment is supportive of switching to lira deposits from KKM,” Gur said, referring to the FX-protected deposit program that was introduced in December 2021 to halt a sharp currency depreciation.

Since elections last May, Turkey has sought to phase out the program, which requires the state to compensate savers for currency depreciation.

KKM deposits fell to 2.4 trillion liras ($78 billion) as of Feb. 2, the biggest weekly outflow since November, and down from a peak of 3.4 trillion liras in August.

Demand for loans in foreign currencies has also started to pick up as the lira stabilized, Gur said. 

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