Goldman Sachs Report: Money Leaving Turkish Funds Flows into TRY Deposits

According to a recent report prepared by Goldman Sachs economists, capital exiting Turkish money market funds has shifted toward Turkish lira-denominated deposits, a trend also reflected in banking data.

The Outflow Process from Funds

According to the report penned by Goldman economists Clemens Grafe and Başak Edizgil, money market funds experienced an outflow of $1.8 billion in the week ending September 11.

As of the first two weeks of the month, the total decline in these funds reached a magnitude of $4 billion.

Increase in TRY Deposits

As stated by the economists, lira-denominated deposits showed an increase amounting to $12 billion as of September 15.

This increase successfully outpaced inflows into foreign exchange and gold deposits within the banking system.

Interest Rates and the Direction of Capital

Despite the drop in deposit interest rates, the figures achieved clearly revealed that money exiting the money market funds was transferred directly into Turkish lira deposits.

With last week's increase, the total monthly deposit rise reached approximately the $20 billion level.

Policymakers' Concerns

The heavy outflows from money market funds this month had triggered concerns that a run on the dollar could occur, which might weaken the Turkish lira and threaten efforts to curb inflation.

The channeling of money into TRY deposits was evaluated as a development that could temporarily ease policymakers' concerns in this regard.