Blog post from the CBRT after one year

The Central Bank of the Republic of Turkey (CBRT) has published a new analysis on its blog page, "Merkezin Güncesi," after more than a year.

CBRT Chief Advisor Yusuf Emre Akgündüz and CBRT Manager Ünal Seven examined the foreign currency purchasing behavior of companies with foreign-exchange-protected deposit (KKM) accounts in this blog post.

The analysis stated that the transition process to the Turkish Lira initiated for foreign-currency-converted protected deposits (DDM) did not create additional foreign currency demand, and that the probability of companies becoming net foreign currency buyers upon maturity has dropped significantly following the regulations.

The analysis examined the spot market foreign currency buying and selling transactions of companies whose conversion maturity arrived after May 1, 2023, during the week the maturity expired.

A weekly dataset was created by combining the deposit amounts of maturing accounts and foreign currency buying-selling transactions for 28,472 firms whose DDM accounts matured in any given week between May 1 and November 21, 2023.

Accordingly, while approximately 30 percent of the firms within the scope of the analysis were net foreign currency buyers at the time of conversion maturity, this rate showed a significant decline following the regulation dated August 20, 2023.

According to the analysis, the positive impact of the regulation on foreign currency demand continued in the period after September, and it was observed that a smaller percentage of companies were net foreign currency buyers at the end of the maturity period.

It was also observed that approximately 8 percent of the companies in the same sample were net foreign currency buyers in weeks when they did not have a maturing DDM account.

News Source: 12punto