Hello, how much higher will the US dollar go?…

On Saturday, a housewife called me to ask for some financial advice and I do not have any idea how she got my number.  This elderly lady, whose name I don’t even know, asked me the same question over and over again, despite I kept giving her the same answer: 

– I heard that the Treasury will not pay the depositors the amounts arising from volatile exchange rates, so people started to withdraw their TRY deposits from banks. Is this true? 

– To whom am I speaking? 

– I’m an investor. Will the government pay or not? Just give me an answer.   

– This recent withdrawal of deposits has nothing to do with exchange rate volatility. People close down their accounts because they prefer collecting interest on normal deposits or they prefer investing in the stock market considering the recent stability in USD/TRY exchange rate.  

– They say that the US dollar will be 25 Turkish liras. Is it true? 

– Might I ask your name, madam? 

– Will the dollar be 25 liras? Please tell me. 

– I don’t know who says such things! Well, it may be in the medium term, but definitely not in the short term. 

– But everyone says that the dollar’s price will rise and that’s why people were withdrawing their liras from banks.  

– If the dollar is going to appreciate further, why would people close their FX volatility-hedged accounts? 

– That’s because the treasury will not pay them the volatility bonus.  

– Madam, apparently, you’re not satisfied with the answers I’m giving you, so why do you keep asking? 

– So, the Treasury will pay, you say? 


This was a brief summary of our conversation. Luckily, I was able to hang up the phone without losing my manners. As far as I understand, some people over a certain age are confused by the messages on their WhatsApp groups. After I hung up the phone, I did a little research and realised that many people let rumours drive their investment decisions. 

The essential problem is that five years ago, the currency basket rate was TRY 4.2 TL, today it is TRY 19.6. A five-fold increase in five years. BIST also increased by almost five times in the same period.  As for the gold price per gram, it has increased more than seven times. During this period, a person who deposited their Turkish lira savings in a bank only doubled its assets.  Based on these facts alone, we can make a correct analysis of the recent trends in FX volatility-hedged deposit scheme (KKM), normal deposits and BIST. I don’t think it’s hard to understand why people lose money in this respect. Well, because of most of them ask around for financial advice without even making an effort to see the obvious.