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Turkish central bank announces support for conversion of gold deposits to lira

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The Turkish Central Bank has said it will provide an incentive for people to convert their gold deposits and participation funds into Turkish lira time deposit accounts, local media reported on Wednesday, citing the Official Gazette.

According to the announcement published on Wednesday in the Official Gazette, the bank will compensate losses incurred by people who convert their gold deposits into Turkish lira time deposit accounts, with a maturity of three months, six months or a year, as of Dec. 28, should the lira’s decline against gold exceeds bank interest rates.

If the funds in the Turkish lira deposit or participation account are withdrawn before the maturity date, the central bank will not pay for the price difference, the announcement said, adding that the accounts opened or converted within the scope of this application can benefit from the incentive only once.

The announcement comes after President Recep Tayyip Erdoğan on Dec. 20 unveiled an emergency plan that would help the Turkish currency curb losses, which stipulates that the country’s treasury will make up for losses incurred by holders of lira deposits should the lira’s declines against hard currencies exceed bank interest rates.

The instrument will apply for individuals holding lira deposit accounts with maturities of between three and 12 months; the minimum interest rate will be the central bank’s benchmark rate; and no withholding tax will be levied, Erdoğan said.

The Turkish lira, which surged by more than 50 percent following Erdoğan’s announcement last week, weakened 1.7 percent on Wednesday, trading at 12.02 against the US dollar by 0615 GMT from a close of 11.8 on Tuesday. The currency has lost 38 percent of its value this year.

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