Turkey should immediately ditch 'FX-protected lira deposit' tool, says CHP leader

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The government should immediately end the foreign exchange-protected lira deposit system, main opposition Republican People's Party (CHP) Chair Kemal Kılıçdaroğlu has said.

"You are dragging Turkey into disaster. It is an unreasonable practice. You take from the poor and give to the rich," Kılıçdaroğlu said today (March 29) during his party's parliamentary group meeting.

The 3-month maturity of currency-protected deposits expired last week. The state paid 17.75 percent interest on depositors. The new tool cost the Treasury about 445 billion lira (~30.5 billion US dollars) since its introduction in December, according to calculations by several economists.

"This is only for three months. It will be 92 percent annually," said Kılıçdaroğlu.

The government introduced the tool to encourage lira-denominated savings. Accordingly, the interest to be accrued on lira-denominated time deposit accounts will be compared with the change in the foreign exchange rates on maturity dates and if the lira's depreciation against hard currencies exceeds the interest rate, the Treasury compensates for the difference.

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(AS/VK)