Corporate Demand Drives Surge in FX Deposits

Turkey's foreign currency deposits have regained significant momentum in the latest weekly data, according to parity-adjusted figures from the Central Bank. The trend highlights a distinct shift toward corporate-driven demand.

Corporate Surge Dominates FX Inflows

Foreign currency deposits recorded a total increase of $2.361 billion last week. The composition of this inflow underscores a heavy reliance on legal entities rather than retail investors:

■Legal entities' FX deposits: Increased by $1.973 billion.

■Retail (Individual) FX deposits: Increased by $387 million.

■Following a massive $5.259 billion jump the previous week, this latest uptick confirms the persistent volatility in currency demand.

KKM Erosion and Banking Sector Liquidity Expansion

As the unwinding of the Currency Protected Deposit (KKM) scheme continues, the overall banking sector continues to expand its balance sheet. Key sectoral shifts include:

■KKM balances: Decreased by 11 million lira, dropping to a total of 191 million lira.

■Total credit volume: Rose by 225.775 billion lira to reach 26.975 trillion lira.

■Total deposit volume: Increased by 492.886 billion lira, climbing to 31.060 trillion lira.

While the continued decline in KKM is a predictable step in liquidity management, the aggressive shift toward FX deposits by legal entities is a signal that requires close monitoring. This corporate appetite for foreign currency suggests that companies are ramping up their currency hedging activities or adjusting to shifting operational cash cycles. We must carefully evaluate the correlation between commercial credit growth and FX demand as macroprudential measures continue to reshape the banking landscape.