Er­do­gan on a slip­pery slope as run on forex hits Turk­ish banks

Bank­ing sys­tem braces for fall­out from big­gest cur­rency shock since 2001

Cape Times - - BUSINESS REPORT - Ben­jamin Har­vey, Kerim Karakaya and Fer­can Yalinkilic

OF­FI­CIALS from the Turk­ish bank­ing reg­u­la­tor and some banks were said to be hold­ing talks on Satur­day as the bank­ing sys­tem braces for fall­out from the big­gest cur­rency shock since 2001.

The Bank­ing Reg­u­la­tion and Su­per­vi­sion Agency, known as BDDK, said there was no meet­ing planned for Satur­day and that any con­sul­ta­tions with banks were rou­tine. Four peo­ple with knowl­edge of the mat­ter said on Fri­day that the reg­u­la­tor had asked them to study the im­pact of in­ter­est rate and ex­change rate shocks and sched­uled a con­fer­ence call on Satur­day. They said they were also ex­pect­ing to dis­cuss the liq­uid­ity sit­u­a­tion in the coun­try.

Vis­its to the branches of three large pri­vate lenders on Fri­day showed that all were strug­gling to keep up with re­quests for for­eign cur­ren­cies. At two banks, cus­tomers couldn’t re­ceive for­eign cur­rency, be­cause the branches were wait­ing for re­plen­ish­ment from head­quar­ters. One bank couldn’t meet a re­quest to with­draw $5 000 (R70 142).

Other bankers speak­ing on con­di­tion of anonymity also con­firmed the up-tick in de- mand for for­eign cur­rency, cit­ing pub­lic fear that mea­sures such as cap­i­tal con­trols could be im­ple­mented to try to stave off a cri­sis. The Turk­ish gov­ern­ment has re­peat­edly said that it won’t im­pose cap­i­tal con­trols.

Some banks are be­ing forced to or­der cash from abroad to meet client de­mand, ac­cord­ing to one per­son. The Turk­ish banks are wiring elec­tronic for­eign cur­rency to in­ter­na­tional banks, and then pay­ing a pre­mium to transport phys­i­cal cash back to Turkey, the per­son said.

Turks have tra­di­tion­ally held a large pro­por­tion of their sav­ings in for­eign cur­ren­cies as pro­tec­tion against run­away in­fla­tion and bouts of cur­rency weak­ness.

About half of the bank­ing sys­tem’s de­posits are in dol­lars or eu­ros, ac­cord­ing to data.

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