The Central Bank expanded the scope of the ‘Deposit and Participation Program for Local Turkish Citizens’, known as Yuvam accounts, according to the decree published in the official gazette. According to this;
· Accounts transfer foreign currency savings of non-residents to Turkish lira accounts in Turkish banks in order to increase their foreign exchange reserves.
· The decree extends the scope of accounts to companies owned or partnered by non-residents.
· The Central Bank is authorized to determine the maximum interest rate to be applied to the bank’s YUVAM account.
· Foreign currency deposit account and foreign exchange participation fund account balances of persons who can open a YUVAM account are converted into Turkish Lira at the request of the account holder, and a YUVAM account is opened.
Currency-protected deposits have now stopped the trend towards foreign currency deposit accounts, even bringing some convertion. In this respect, the first commissioning of the product as of the end of December and the expansion of its scope with new applications contribute to the balance in exchange rates to a certain extent. It is seen that the main strategy at the point of ensuring stability in exchange rates is not the monetary policy implementation, but the FX-linked deposit and liraization strategy. For this purpose, when the companies were included in the business with a little tax advantage within the scope of expanding the scope after the product was put into use, the tendency to these deposits increased.
In the upcoming period, both individuals and companies may tend to buy foreign currency again when the FX-linked deposit product exits. This, in turn, poses the risk of having the opposite effect of what is happening now, when the practice regarding the deposit type comes to an end. It seems that the exchange rate may remain stable with the FX-linked deposit product and the positive contribution of tourism to the current account balance in the coming months. However, it may not have a very strong effect on maintaining the value of TRY in the longer term. Monetary policy is not tight and negative real interest rate limits the tendency to save in TRY. This situation can put negative pressure on the lottery. On the other hand, since the Treasury has guaranteed the exchange rate return for the FX-linked deposit product, a public finance burden will arise in exchange rate increases. We consider that the emphasis is on low volatility in exchange rates, rather than a continuous decline, within the framework of exporter profitability and competitive exchange rate discourses.
Inflation is quite high and the PPI, which is close to 100%, causes the cost burden here to be still very high. We think that maintaining the balance in exchange rates with secondary instruments will not be a long-term strategy in an economy where the returns are well below the inflation rate, and the main issue is to reduce inflation and tighten the monetary policy.
Kaynak Tera Yatırım-Enver Erkan
Hibya Haber Ajansı
Kaynak: Hibya Haber Ajansı