Central Bank of the Republic of Turkey, CBRT, announced a new decision for Exchange Rate Protected Deposits. CBRT made a new regulation to make Turkish Lira attractive for individuals and companies.
According to the Central Bank’s statement, the minimum interest rate applied to banks for Exchange Protected Deposit (KKM) accounts has been terminated. With the new decision, banks will be able to offer interest to customers for KKM accounts below the CBRT funding rate.
Thus, while TL deposit accounts will become more attractive, the advantages of Exchange Rate Protected Deposits will gradually decrease.
According to the current situation, citizens who hold KKM deposits at rates lower than the CBRT interest rate, and if the foreign exchange rate rises further, if this rate is lower than the policy rate (30%), the bank will cover the difference. If the exchange rate difference exceeds the policy interest rate, the Central Bank will pay the difference over 30%.
CBRT has recently made a series of moves to prevent KKM accounts from losing their attractiveness. Authorities increased the required reserve ratio for long-term foreign currency conversion accounts. For this reason, banks began to offer their customers return rates of over 50% for TL deposits.