Foreign Currency Deposits Slip by $297 Million, KKM Plummets: Shifting Dynamics in Turkey’s Banking Sector

Foreign currency deposits fell by $297 million in a week on a parity‑adjusted basis, while the KKM (Currency‑Protected Turkish Lira Deposit) balance shrank by 47 million TL, sinking to 4 million TL.

An Abrupt Pullback in FX Deposits

Parity‑adjusted data show a $297 million contraction in total foreign currency deposits for the week of July 14, reversing a $1.77 billion gain recorded the prior week.

Flow Between Individuals and Corporates

■Individual FX deposits dropped by $1.056 billion.

■Corporate deposits rose by $759 million.

KKM’s Sharp Decline

Currency‑protected TL deposits and participation accounts (KKM) lost 47 million TL in a single week, falling from 51 million TL to 4 million TL.

Banking Sector’s Ongoing Expansion

■Total loan volume rose to 27.683 trillion TL, an increase of +201 billion TL.

■Total deposits climbed to 31.810 trillion TL, up by +528 billion TL.

The sudden dip in FX deposits signals a tightening of risk appetite among investors, while the collapse of KKM indicates waning demand for currency‑protection instruments. Banks must adopt a more cautious liquidity strategy to sustain credit growth; failure to do so could expose loan portfolios to external shocks. Restructuring of hedging products will be crucial for both SMEs and large corporates moving forward.