Turkey’s FX-Protected Deposits Continue to Fall by 31 Million TL
Turkey' s currency-protected deposit accounts, known as Kur Korumalı Mevduat (KKM), have recorded a further decline.
According to recent figures, the total balance held in these accounts fell by 31 million Turkish lira (TL) during the week ending 10 July.
This reduction is a continuation of an ongoing trend, as the aggregate value within the KKM scheme steadily decreases.
What are KKM accounts?
KKM accounts were introduced in Turkey to protect savers against fluctuations in exchange rates and to encourage deposits in Turkish lira.
The scheme guarantees that if the lira weakens against foreign currencies (such as the dollar or the euro) by more than the banks' offered interest rates, the state will cover the difference.
This was intended to make it more attractive to keep savings in lira and thereby contribute to financial stability.
Since their introduction, KKM accounts have represented a significant portion of the Turkish banking system.
The scheme has been an essential tool for stabilising the lira and managing investor behaviour during periods of high inflation and currency volatility. The significance of the decline of 31 million TL over a single week, coupled with the fact that this is a persistent trend, indicates a gradual shift in the preferences and confidence of Turkish savers.
A reduction in KKM accounts means that depositors are either withdrawing funds or choosing not to renew their existing accounts when they reach maturity.
This may be due to changing expectations regarding inflation and currency trends, or because other investment opportunities are now perceived as more attractive.
For the Turkish economy and the banking system, developments in KKM accounts serve as a vital indicator.
A sustained decline could impact bank balance sheets, liquidity, and the state' s future obligations linked to KKM guarantees.
This is a development that is being monitored closely by financial institutions and economic analysts within Turkey.
Source: Haberglobal
