Turkey's central bank increased the reserve requirement ratio for KKM accounts from 33% to 40% and reduced the minimum interest rate such accounts earn to 40% of the policy rate, down from 50%. These measures aim to support the lira, which has recently underperformed compared to other currencies in the Europe, Middle East, and Africa region.
Turkey's central bank has implemented measures aimed at supporting the Turkish Lira, which has been noted as the worst-performing currency in the Europe, Middle East, and Africa (EMEA) region. The monetary authority increased the reserve requirement ratio for its foreign-exchange protected deposit scheme, known as KKM, to 40% from a previous 33%. Concurrently, it made these accounts less attractive to depositors by reducing the minimum interest rate they earn to 40% of the policy rate, down from 50%. These actions effectively increase the cost for banks to hold KKM deposits while reducing their appeal to savers. This policy shift signals an attempt to gradually unwind the KKM program, which has been a cornerstone of unorthodox policy, and steer depositors toward standard lira assets to create more organic support for the currency. The mildly negative sentiment signal underscores that these measures are a reaction to significant currency stress rather than a sign of fundamental strength.
AI-powered research, real-time alerts, and portfolio analytics for institutional investors.
Request a DemoOverall Sentiment
mildly negative
Sentiment Score
-0.30
