FX-protected accounts scheme opened to foreigners
Foreign companies and individuals will be able to open Turkish Lira-denominated time deposit accounts that will be guaranteed by the Turkish Treasury and the Central Bank against foreign exchange fluctuations, according to the Official Gazette published yesterday.
In a bid to to increase the attractiveness of lira savings, the Turkish government initiated FX-protected lira-denominated deposit schemes starting from Dec. 22, 2021.
As of March 18, the total volume in those accounts hit 561.87 billion liras ($37.89 billion), according to data from the Banking Regulation and Supervision Agency (BDDK).
The time period of those accounts could be extended without a limit until further notice from authorities.
The record low in the value of the lira in December 2021 was 18.36 against the U.S. dollar. The currency gained strength with the new schemes to around 13.5 until the Ukraine war erupted on Feb. 24. The value of one lira floated around 14.82 against the greenback yesterday.
The lira is down 11 percent against the dollar this year, mainly due to the economic fallout from Russia’s invasion of Ukraine. The currency had declined 44 percent last year.
The Turkish government’s new approach, dubbed as Turkey Economy Model, prioritizes a current account surplus, increasing exports, GDP growth and expansion in employment, while keeping interest rates low.