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First thoughts on Turkey’s FX-indexed deposit scheme

A new scheme announced by Turkey’s President Erdogan last night, which compensates holders of lira deposits for exchange rates losses, has triggered a sharp rally in the lira and will help to mitigate some of the risks that had started to crystalise in the banking sector. But the policy pushes exchange rate risks to the public finances – up till now a point of strength in the economy.
Jason Tuvey Senior Emerging Markets Economist
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