Households and corporations "have largely maintained their preference for Turkish lira assets," the central bank said in a new blog evaluating FX tendencies, released on Thursday.
"The termination of the FX-protected deposit (KKM) accounts, gold price movements, and the rise in euro-dollar exchange rate were among the factors leading to the recent increase in foreign currency deposits," the Central Bank of the Republic of Türkiye (CBRT) said.
Recalling the trends in 2023 and 2024, and the move to curb the volume of FX-protected accounts, the blog, prepared by specialists at CBRT, indicated that, "In 2025, the nominal rise in FX deposits was largely driven by the rise in the euro-dollar exchange rate and gold prices."
Moreover, they pointed out the rise in gold prices, noting that the price of gold per ounce, which was around $2,600 at the end of 2024, reached its peak value of $4,500 on Oct. 17, marking an approximately 73% increase, before settling at $4,000 at the end of October.
"The rise in global gold prices also affected portfolio choices. The fact that the returns from gold, particularly in September and October, were significantly above those of other financial instruments led to a stronger demand for gold deposits," it added.
At the same time, the transition from KKM accounts to FX was "also among the drivers of the increase in FX deposits," the bank said.
"In the same period, the KKM balance decreased by $29 billion, falling to below $4 billion. The conversion rate from these accounts to FX was around 25% from March to August."
"To sum up, FX deposits have been increasing due to movements in the euro-US dollar exchange rate and valuation effects. FX deposits adjusted for price and exchange rate effects, on the other hand, have increased less, with the termination of KKM accounts and demand for gold deposits the likely culprits for this increase," the blog read.
"Despite the surge in gold prices, the share of Turkish lira deposits remains at historical averages. These developments suggest that households and corporations have largely maintained their preference for Turkish lira assets," it concluded.
