Central Bank enriches lira deposit scheme

ANKARA

The Turkish Central Bank announced on Dec. 29 that it will give incentives to encourage people to shift from gold to Turkish Lira deposits.

“The Central Bank of the Republic of Turkey has decided to provide incentive to deposit and participation fund holders in the event that their gold deposits and participation funds are converted into Turkish Lira time deposit accounts,” the bank said.

The total amount in gold accounts currently stands at 270 billion liras ($22.4 billion).

To increase the share of lira in total deposits in the banking system, the Central Bank announced on Dec. 21 that deposit and participation fund holders would be provided with incentives in the event that they converted their foreign currency deposit accounts and participation funds into lira time deposit accounts.

Under the FX-protected lira deposit account scheme, the government has pledged to to pay the difference if the interest yield of lira savings is below the FX yield in the same maturity period.

After the announcement, the value of the lira climbed up by nearly 50 percent last week, touching a five-week high of 10.63 against the U.S. dollar.

Yesterday, the lira fell for a third straight session, to around12.67 to the greenback.

Meanwhile, the Central Bank released its Monetary and Exchange Rate Policy for 2022 document yesterday.

The bank underlined that it will continue to implement the floating exchange rate regime and that free-market conditions will continue to determine FX rates.

The bank’s official reserves amounted to $125.6 billion as of the end of November, while the foreign exchange reserves stood at $78.5 billion.

“The medium-term inflation target of 5 percent set jointly with the government has been maintained. The monetary policy will be formulated to bring inflation to the target gradually,” said the bank.

Headline inflation rate in Turkey hit a three-year high of 21.3 percent on an annual basis in November.