As deposit rates rose above 45 percent with the ongoing increases after June, the share of standard TRY deposits reached the highest level of the last 6.5 months.
With the increases in the policy rate and the simplification steps taken, the ratio of standard TRY deposits in total deposits rose to 38.55, reaching a 6.5-month peak. Standard TRY deposits have increased by 40.3 percent since the end of June.
With the economic administration’s encouragement of the transition from currency-protected deposits to standard TRY deposits and the increasing TRY deposit rates with the recent simplification steps, the ratio of currency-protected deposits in total deposits decreased to 20.33 percent, while the ratio of standard TRY deposits increased to 38.55 percent.
Since the week of June 27, when the new Central Bank took office and made its first interest rate hike, TRY deposits have increased by 40.3 percent. This stands out as the highest rate since 39.11 percent in the week of April 28. According to Central Bank data, the interest rate on TRY deposits with a maturity of up to 3 months has also reached 46 percent.
According to the weekly banking sector data of the Banking Regulation and Supervision Agency (BRSA), total deposits in the sector increased by TRY 120.5 billion to TRY 13 trillion 960.2 billion in the week ending November 10 compared to the previous week. This indicates an increase of 62.7 percent on an annual basis. Standard TRY deposits increased by TRY 193 billion to TRY 5 trillion 383 billion in the week ending November 10 compared to the previous week, while the decline in the size of FX-protected deposits continued. In the week ending November 10, the size of FX-protected deposits decreased by TRY 82.9 billion to TRY 2 trillion 838.8 billion. The size of FX protected deposits in dollar terms also decreased to USD 100 billion 42 million.
Interest rates increased by double digits
In its Financial Stability Report published last week, the Central Bank drew attention to the steps taken and pointed out that TL deposit rates started to move in a path compatible with policy rates after the macroprudential framework was prioritized and simplified. The increase in the share of TL deposits was largely driven by the rise in deposit interest rates due to the Central Bank’s moves.
According to Central Bank data, as of the week ending November 10, the most preferred TRY deposit interest rate with a maturity of up to 3 months increased to 45.85 percent, which is 17.12 percentage points above the 28.73 percent interest rate in the week ending April 28.
Total TRY deposit interest rate also increased from 21.92 percent on April 28 to 40.58 percent as of November 10. There was an increase of 18.66 points.
While the ratio of standard TRY deposits in total deposits has increased, the ratio of currency-protected deposits, as desired by the economic administration, continues to decline. According to BRSA data, as of the week of November 10, the ratio of FX hedged deposits in total deposits declined to 20.33 percent. This ratio also marks the lowest level in 6.5 months. With the recent steps taken, reserve requirement ratios were increased and the conversion target for real persons was raised.
CBRT EXPECTED TO RAISE THE POLICY RATE BY 250 BASIS POINTS
The Central Bank and the economic administration plan to continue their efforts to increase the share of standard TRY deposits in total deposits. This week, the November Monetary Policy Committee meeting will be held. The new Central Bank administration has raised the policy rate by 26.5 points in 5 meetings since it took office, from 8.5 percent to 35 percent. In the last October meeting, another 500 basis point rate hike was made. Economists participating in AA Finans’s expectations survey regarding the Monetary Policy Committee (MPC) meeting of the Central Bank of the Republic of Turkey (CBRT) estimate that the policy rate will be increased by 250 basis points to 37.50 percent.
AA Finans’s survey of expectations for the CBRT’s MPC meeting to be held on Thursday, November 23 was concluded with the participation of 12 economists. The median of economists’ expectations for a change in the policy rate was realized as 250 basis points increase. According to the survey results, the policy rate expectations of economists, who predicted an increase of 250 to 500 basis points, ranged between 37.50 percent and 40.00 percent. The median of economists’ year-end policy rate expectations was 40.00 percent.