Page 65 - TURKRptJun19

8.1.3 Deposits
Turkish resident holdings of foreign exchange surpassed those of the Turkish lira (TRY) for the first time on record at the end of March, with USD and euro holdings equivalent to TRY1trillion versus TRY993bn held in Turkey’s own currency, data from Turkey’s Banking Regulation and Supervision Agency shows. The latest economic and political tensions plaguing Turkey have seen the TRY sink 14% against the dollar in the year to date, following last year’s decline of around one-third, with the lira trading just short of breaching the 6.20 threshold on May 8. Given the woes, dollarization has continued apace. BlueBay Asset Management analyst, Timothy Ash, said that secular Turks were "giving up", prompting the turn away from the TRY while poor policy implemented by the central bank was also driving the trend. With no light at the end of the tunnel, Ash added: "I think both sources of dollarisation will accelerate." It isn't just external fiat currencies that Turks are fleeing to with latest gains in the cryptocurrency sphere appearing somewhat correlated to the TRY's slide, wrote ExchangeRates.org.uk on May 8. “Indeed, statistical analysis reveals a significant correlation between USDTRY and Bitcoin prices developing over the tail end of 2018 and strengthening through Q1 2019,” it said. The publication quoted senior currency strategist Christopher Vecchio of DailyFX, who said: "We’ve continued to witness how strength in cryptocurrency markets goes hand in hand with weakness in emerging market currencies. Since the start of September 2018, we’ve seen that Bitcoin prices and the Turkish Lira have traded in, effectively, a diametrically opposing fashion". "In other words, when the Lira has rallied, Bitcoin has weakened (September to December 2018); when the Lira has depreciated, Bitcoin has strengthened (January to present)."
65 TURKEY Country Report June 2019 www.intellinews.com