Turkish lira deposits shrink amid currency rout

Bank deposits in Turkish lira shrank in the final days of August while the value of foreign currency loans surged as the lira slid further against major currencies, central bank data showed.

Deposits in lira at banks in Turkey fell 2.4 percent to 1.005 trillion liras ($153 billion) on Aug. 31 compared with Aug. 20, which was just prior to a national holiday. Total deposits in foreign currency held by Turks in Turkey and abroad also fell by about 1 percent to $183.7 billion as Turks cashed in some foreign currency, according to calculations based on the data.

The value of loans in foreign currency awarded by banks in Turkey surged 7.8 percent to 1.04 trillion liras in the period due to the lira’s decline. The value has jumped 71 percent since the start of the year, according to the figures. Meanwhile, lira loans at Turkish banks shrank 0.5 percent to 1.5 trillion liras following a 0.1 percent increase in the previous five weeks.

Turkey’s lira has slumped about 40 percent against the dollar since the start of the year. The decline was sharpest in August – the currency dropped about 25 percent – after the United States imposed sanctions on the country for the internment of U.S. pastor Andrew Brunson and other Americans. President Recep Tayyip Erdogan has called on citizens to change their dollars for liras to help bolster the currency.

The drop in the lira from the close of trading on Aug. 20 to the end of trading on Aug. 31 was about 7.1 percent.