According to the weekly data of the Central Bank of the Republic of Turkey, total foreign currency deposits decreased by 172 million dollars in the week of April 22, adjusted for the parity effect. Compared to the previous week, foreign currency deposits of real persons decreased by 144 million dollars, while foreign currency deposits of legal entities decreased by 29 million dollars.
Total deposits in the banking sector (including between banks) increased by 31 billion 857 million 601 thousand liras in the week ended April 22 and rose to 6 trillion 292 billion 620 million 333 thousand liras. In the same period, TRY deposits in banks increased by 1.03 percent to 2 trillion 609 billion 997 million 241 thousand liras, and foreign currency (FX) deposits increased by 0.18% to 3 trillion 439 billion 765 million 714 thousand liras. Last week, while the total foreign currency deposits in banks were 243 billion 961 million dollars, 216 billion 21 million dollars of this was collected in the accounts of residents.
The risk aversion profile weighted by the global investor due to the Russia-Ukraine war also affects the lira's situation due to the weak return position in Turkish assets. Despite the higher year-end inflation expectations, the Central Bank does not signal any change in monetary policy. The lira profile, which is between the disadvantage of increasing real interest rate, the Fed's faster tightening expectation and the impact of Russia's invasion of Ukraine on global commodity prices, may cause investor indifference in the future and the performance of the lira may remain on the negative side. On the other hand, the search for protection from inflation by local investors had a positive impact on the performance of stocks.
The central bank raised its inflation forecast for 2022 to 42.8% from 23.2% in January, saying the latest outlook is no reason to tighten monetary conditions. Meanwhile, Turkey is working on a plan to attract foreign exchange inflows by offering lira funding with interest-free and guaranteed 4% dollar returns, reflecting pressure on policymakers to reverse capital outflows. The plan targets foreign investors who want to park their money for at least two years. In the process that started with President Mr. Recep Tayyip Erdoğan's announcement of TRY investment incentive measures at the end of December, we still follow the effect of real persons and legal entities on withdrawals from foreign currency deposits and their conversion to currency-protected accounts on TRY basis as the main determinant.
At the current level, we will continue to follow the trends in the FX-linked deposit product focused on dollarization, reserve cumulation and financial stability. In the BRSA data, we see that as of the week of April 22, there is a FX-linked product accumulation of 782.03 billion TRY. In addition, although a breakdown of FX and TRY accounts has not been published, we consider this distinction as 55% conversion from FX to TRY and 45% direct TL account opening in line with the statements of the Ministry of Treasury and Finance. The financial dollarization rate is at 55.33% as of the week of April 22, we see a slight decrease from the rate that was 55.55% in the previous week. This rate was at the level of 54.8% in the same period of the previous year.
Kaynak Tera Yatırım
Hibya Haber Ajansı