Expats living off the interest paid on savings in their local Turkish bank can enjoy an extra meal out each week, after Turkey’s central bank raised interest rates for the first time since October 2011.
It’s not uncommon for resident Brits to deposit lump sums in a high interest Turkish lira account – banks there are typically paying 8-9 per cent today, with many raising their rate by just under 1 per cent as a result of the recent central bank hike.
Cannny expats will shop around and research on-line the best rates available from the Turkish banks, and be able to calculate their monthly disposable income from the monthly interest paid. Banks popular with expats, which typically have English-speaking staff, include Garanti, HSBC, Is Bank, Akbank, Deniz Bank and TEB.
The decision by Turkey’s central bank to raise its rate, namely its overnight lending rate to 7.25 per cent, came after the Turkish Lira slumped to record lows against major currencies in August.
The lira had depreciated to 1.9832 against the dollar on August 22, poised for its lowest close since at least 1981. The currency has slumped 10 per cent this year, the second-biggest drop among major emerging-market currencies in Europe, the Middle East and Africa. The lira has been one of a number of currencies to lose value following the revelation that US Federal Reserve policy meeting minutes showed its massive stimulus package could be reduced as early as next month. There are expectations that interest rates in Turkey could be raised further.