Scheme protects deposits from FX depreciation
Adopted in 2021 to halt lira crash
After Uturn, Ankara wants to wind it down
Bankers, data suggest most returned to dollars in Aug

ISTANBUL, Sept 4 Reuters Turkish depositors mostly converted funds back to dollars last month when they withdrew from state depreciationprotected accounts, according to initial data and senior bankers, as Ankara begins winding down the scheme in a broad policy Uturn.

Since President Tayyip Erdogan won reelection in May, authorities have raised interest rates sharply under the Uturn and set a goal of reducing the near 130 billionworth of lira currently held at the accounts, known as KKM.

The central bank protects deposits from depreciation under KKM, adopted in late 2021 to arrest a historic currency crash.

But since then, the lira has shed another 50 of its value including 25 since this year39;s election ramping up the scheme39;s costs and testing confidence in the currency just as authorities are seeking to reinforce it.

Two of the senior bankers told Reuters that since the election, the central bank has continued to sell forex to lenders in order to meet the demand of those closing down KKM accounts.

According to one of the bankers, 20 of the KKM accounts that were initially converted to lira from foreign currency were ended in August. Of those, around two thirds were converted back to forex while the rest moved into regular lira accounts, according to three bankers.

One former KKM…