The latest data regarding the Currency Protected Deposits, which were created to protect the Turkish Lira against exchange rate fluctuations, has been announced by the Central Bank of the Republic of Turkey (TCMB).
The total amount of Currency Protected Deposits increased by 34.9 billion Turkish Lira last week, reaching 2.53 trillion Turkish Lira (122.1 billion dollars).
The Currency Protected Deposits
The Currency Protected Deposits, also known as Kur Korumalı Mevduat in Turkish, are financial instruments designed to protect investors against exchange rate fluctuations. These deposits are offered by banks in Turkey and are denominated in Turkish Lira but linked to a foreign currency, typically the U.S. dollar or the euro.
The purpose of Currency Protected Deposits is to provide a hedge against currency risk for individuals and businesses who hold assets or have liabilities in foreign currencies. By depositing funds in a Currency Protected Deposit, investors can protect the value of their assets from potential devaluation of the Turkish Lira.
The return on Currency Protected Deposits is usually determined by the performance of the linked foreign currency. If the foreign currency appreciates against the Turkish Lira, investors can benefit from the exchange rate gains. On the other hand, if the foreign currency depreciates, the deposited funds are protected from losses, and investors receive the original Turkish Lira amount.
These deposits provide a way for individuals and businesses to manage their currency exposure and mitigate the risks associated with exchange rate fluctuations. However, it’s important to note that Currency Protected Deposits may have specific terms and conditions set by each bank, so it is advisable to consult with the respective bank for more detailed information.