Turks seem to avoid Erdoğan’s call to convert foreign currency savings to lira

Despite Turkish government’s calls on Turks to convert their dollar and euro savings into lira, the amount of savings in foreign currency accounts has increased by $5 billion over the last three months, Cumhuriyet newspaper reported on Saturday.

The amount of foreign exchange deposits of Turkish nationals living in Turkey was at $80 billion in August, when Turkish lira hit record lows against the dollar as a result of a diplomatic row between Turkey and the United States.

“However, I say it once again from here, if there is anyone who has dollars or gold under their pillows, they should go exchange it for liras at our banks. This is a national, domestic battle,” Turkish President Recep Tayyip Erdoğan said on Aug. 10, the day lira lost as much as 20 percent. 

“This will be my people’s response to those who have waged an economic war against us,” he said referring to sanctions imposed by the United States as a response to almost two year detention of an American Pastor.

Turkish government reduced taxes on interest earnings on bank deposits in liras from 10 percent to zero, while increasing taxes on interest earned from foreign currency accounts carrying a maturity of up to six months to 20 percent from 18 percent on Aug. 31.

However, the amount of foreign exchange deposits has reached to $86 billion in the beginning of November, Cumhuriyet said. 

Cumhuriyet said that Turkish people preferred to keep their savings in foreign currencies although the interest rates for savings in lira had been increased to 25 percent. Inflation in Turkey edged up to 25.2 percent in October from 24.5 percent the previous month.