Page 12 - TURKRptJun20

Turkish lenders’ daily volumes in swap transactions with foreign counterparts fell to $51mn on May 11 from the billions of dollars seen before limitations were imposed by banking watchdog BDDK, BloombergHT reported on May 21.
However, Turks are buying dollars as the lira deposit rates stand at around 8% (extract a 15% or 1.2pp tax on deposits for maturities up to six months) on average with lower margins going as low as 6% versus official inflation of 10% and the unknown level of actual inflation that people face in their daily lives.
The BDDK imposed on May 21 a one-day settlement delay on the purchase of more than 100 grams of gold while the Treasury classified non-physical delivery type precious metal (gold) purchases as FX transactions subject to a 0.2% Tobin tax.
On May 23, Erdogan hiked that Tobin tax to 1% from 0.2% while he has also increased the tax rate on bank bills to 15% from 10% as lenders were lately directing their customers to bills from deposits to meet their asset ratios.
The officials at the helm of the economy break out in cold beads of sweat at the idea of crowds of Turks streaming to the banks to demand their dollars. They damn well need to discourage any such notion but at the same time they offer no return on lira savings and introduce taxes on FX and gold. What if a critical mass of resident deposit holders decided to grab their greenbacks and invest in black market gold and FX? The hard currency held by such bank customers amounts to around $120bn. If great numbers of them decided enough was enough, the government would have no choice but to deploy stricter capital controls. For that deposited FX no longer exists in reality.
When will the lira see its next record?
Perhaps, the answer is hidden in the Turkish national anthem:
“​For soon shall come the joyous days of divine promise; ​Who knows? Perhaps tomorrow? Perhaps even sooner!​”
2.2​ ​New finance regulation threatens economic reporting in Turkey says CPJ
Turkish authorities should revise a financial regulation passed last week to ensure that it cannot be used against journalists, the Committee to Protect Journalists (CPJ) said on May 11.
On May 7, Turkish authorities ratified a new banking regulation that imposes fines for disseminating information that “would damage the financial system and lead to systemic risks due to the loss of trust in the financial system” or which “keeps the price ... [of a] financial instrument at an abnormal or artificial level or that [gives a] false and misleading impression regarding the supply, demand, or price of the same instrument,” according to the text of the regulation, posted in Turkey’s Official Gazette, noted the press freedom watchdog.
Umit Akcay, an economics columnist at the news website Gazete Duvar and associate professor at the Berlin School of Economics and Law, told CPJ via messaging app that the regulation may prompt journalists who cover economic issues to self-censor for fear of being fined.
“The ambiguity in Turkey’s new banking regulations, along with the arbitrary nature of deciding what reports may be harmful to the country’s banking system, threaten independent reporting on the country’s economy,” said
12​ TURKEY Country Report​ June 2020 ​ ​www.intellinews.com