17:16 - 22.08.2024

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August 22, Fineko/abc.az. Türkiye is witnessing a surge in demand for dollars and foreign currency deposits amid skyrocketing inflation. While this situation complicates the efforts of the Central Bank, which is grappling with one of the highest inflation rates in the world, experts have warned about the depreciation of assets held in Turkish lira.

ABC.AZ reports that, according to calculations by British bank Barclays, foreign currency deposits have increased by $4.1 billion over the past five weeks, with demand primarily coming from companies. Economists Clemens Grafe and Başak Edizel from Goldman Sachs stated that the beginning of a shift towards the dollar "signals a deterioration in expectations."

The Goldman economists, who anticipate the first interest rate cut by September, cautioned that the rate reduction might be postponed due to the strengthening trend of the dollar's exchange rate and growing inflationary pressures. A source familiar with the economic policy mentioned that the growth in foreign currency deposits is expected, but the trend remains within plans for now.

It is assumed that the increase in foreign currency deposits was caused by exits from the KKM (a deposit system with exchange rate protection) and a seasonal rise in demand from companies. Earlier this week, state banks also increased their foreign currency sales to meet the growing domestic demand, selling around $3 billion in just two days.

As household inflation expectations, which the Central Bank has had to address frequently in recent times, continue to rise, so does the demand for dollars in Türkiye.