00:00 We are waiting for a meeting with the Turkish Central Bank.
00:03 It does not seem that we have high expectations that Erkan will be able to maintain a large increase in interest rates.
00:12 She said previously that she will increase the interest rate but gradually.
00:16 One of the most prominent files that were pressing on the performance of the Turkish Lira
00:21 is the large increase in interest rates and the clear transformation of foreign currency reserves to the fixed interest rate.
00:30 It is notable that during the past period, and after we saw the effect of the increase in interest rates and the transformation of net reserves to the fixed interest rate,
00:40 which is what has been pressing on the Lira, we have seen an increase in foreign currency reserves and a clear transformation to the fixed interest rate.
00:49 The amount has now reached the level of 15 billion dollars.
00:52 The question is how did the Turkish government do that?
00:55 The issue is related to a program launched by the Turkish government to support and protect Turkish foreign exchange reserves against inflation.
01:04 This program is based on the government compensating the Turkish citizen for any recession in the currency or any inflationary pressure related to his foreign exchange reserves.
01:15 The Turkish banks have opened specific accounts for foreign exchange reserves and the Turkish government has supported them.
01:22 If there is a large recession in the Turkish Lira and this money loses a large part of its value,
01:31 more than what this account earns as interest rates, the Turkish government intervenes and the Turkish investors get used to this difference.
01:39 The problem today is that these accounts have reached the level of 124 billion US dollars as foreign exchange reserves protected by the Turkish government from inflation.
01:54 This number represents 25% of the total accounts and foreign exchange reserves of the Turkish banks.
02:02 When the Turkish government launched this program, the Turks were able to liquidate their dollars and convert them into Turkish Lira.
02:11 Therefore, the central bank benefited from the dollars that came from the banks as a result of this liquidation.
02:18 This is what we have seen as a clear increase in foreign exchange reserves to the fixed interest rate.
02:23 The dilemma today is divided into two parts.
02:26 The first is that the Turkish government may not be able to continue with this program because it is expensive and it has to bear a lot of financial pressure to compensate the currency difference in Turkish Lira.
02:39 The second dilemma is that the Turkish banks are no longer able to buy Turkish government bonds because other foreign exchange accounts are not enough to do so.
02:48 Therefore, we expect that the Turkish central bank will start raising interest rates in a fast way,
02:55 in parallel or close to inflation rates, so that it can withdraw from this program.
03:01 At the same time, it supports the idea of the Turks to put their savings in commercial banks.
03:09 This is the most important question. We have to wait for the upcoming Turkish central bank meetings to see how the monetary policy will move.
