Trend of Deposit Does Not Look Pretty

FX Deposits and USDTRY2

The recent trend of FX deposits does not look pretty at all as well as acts as reminiscent of 2001’s financial crisis in Turkey. The chart above shows the clear picture of both TRY and FX deposits are heading into. As demonstrated above, the terrifying spread emerged last summer, likely after the erosion of Turkish Lira due to capital inflows arising out of political unrest. A shocking move in foreign exchange rate supports the herd mentality as savers start to prefer the US Dollar or Euro rather than Turkish Lira. Eventually, this is turning to be vicious cycle where the Turkish Lira is the only loser.

Even if it is too early to speak artily of a currency crisis, the scenario I just explained what had been lived in painful memories 1994, 2000 and 2001. Therefore, this trend is alarming that everyone should keep an eye on.