Stable dollar rates spur deposit drop, loan increase, travel boom and import surge

During the first six months of 2024, the dollar rose by only 11.1%. In response to the stable dollar rates, foreign currency deposits decreased, foreign currency loans increased, overseas travel became more popular, and consumer goods imports accelerated.

Here are the details of the reactions of Turks to the steady exchange rate:

As the first six months of 2024 came to an end, the U.S. dollar rose by only 11.1% from January to June. This performance failed to protect the expected 25% inflation rate (CPI) and lagged significantly behind other investment tools such as the stock market, Turkish lira deposits and gold.

Central Bank of the Republic of Türkiye (CBRT)’s tight monetary policy, aimed at maintaining a “strong Turkish lira,” played a key role in this stability. In response to the stable dollar rates against the Turkish lira, Turks exhibited four distinct reactions.

1. Decline in foreign currency deposits
   In the week before the election, domestic residents’ foreign currency accounts peaked at $185.80 billion. According to the latest CBRT data, foreign currency deposits (DTH) have since fallen to $165 billion. During the same period, exchange rate-protected deposits (KKM) decreased from 2.276 trillion TL to 2.032 trillion TL. Overall, domestic investors saw a total decrease of $27.5 billion amid dollar stability.
2. Increase in foreign currency loans
   With high Turkish lira interest rates, there was a rise in foreign currency loans on the corporate side. According to Banking Regulation and Supervision Agency (BRSA) data, foreign currency loans increased from $134.68 billion in the week of March 29 to $150.60 billion in the week of June 21.
3. Increase in overseas travel
   Stable exchange rates made overseas holidays more attractive. As prices for domestic tourism rose, more Turks opted for international travel. The long queues to visit the Greek islands during the recent holiday were notable. TUIK data revealed that in the first quarter of this year, approximately 2.5 million people traveled abroad, marking an 18% increase compared to last year.
4. Acceleration in consumer goods imports
   Looking at the last three months of data from March to May:
   • In March 2024, consumer goods imports increased by 19.3% compared to the same period last year, reaching $4.6 billion.
   • In April 2024, imports rose by 34% compared to the same month in 2023, totaling $4.9 billion.
   • In May 2024, consumer goods imports showed a 20% increase, reaching $5 billion.