Deposit Interest Rate Strengthens, Dollar and Euro Keep Investors Waiting

Below Record Real Returns

As of May, gold bullion delighted the investor with an annual return of 24.87 percent real when adjusted for inflation (CPI), while the deposit interest also provided a 5.83 percent real return.

Gold stands out as one of the rare groups of assets that has consistently earned its investor over the past year. Geopolitical tensions in global markets, uncertainty in interest rate decisions by central banks, and inflation pressure have led investors to turn to gold as a safe haven. In Turkey in particular, with the appreciation of TL and the upward movement of deposit rates, gold performed remarkably well both against foreign exchange and among domestic investment alternatives. In the light of reduced calculations with the CPI, gold, which has provided real returns for 10 months, has renewed confidence, maintaining the purchasing power of its investor in the face of inflation.

📉 Loss Series in Dollars and Euros

On the other hand, in the foreign exchange markets, the picture is moving in the opposite direction. The dollar and the euro have been hurting investors for the past 2 years as an investment vehicle in Turkey. Reduced data, according to the CPI, show that the dollar suffered a real loss of 11.14 percent, while the euro suffered a real loss of 7.27 percent. This indicates that the investor is moving away from foreign currencies, especially individuals who have accumulated indexed to foreign exchange experience a decline in purchasing power. In particular, the inability of the dollar to deliver real returns for 22 months and the euro for 14 months in a row foreshadowed serious shifts in investment preferences. In the process, the limitation of fluctuations in the exchange rate from the point of view of the domestic investor and the policies of the CMB to ensure exchange rate stability significantly reduced the attractiveness of the currency.

🏦 Developments Across the Market

The increase in interest rates on deposits has positively affected investor psychology. The rebuilding of confidence in TL, in particular, has led domestic investors to move away from more volatile asset groups such as foreign exchange and exchange and turn to deposit products that offer more stable income. The 10-month negative course of the BIST 100 index and the 26-month loss process in government domestic debt securities (IBS) pushed up the perception of risk, while investors sought balance in their portfolios. The ongoing decline in BIST is associated with macroeconomic uncertainties and a narrowing of company profit margins, while long-term losses on the DBS side point to an imbalance in the interest-inflation correlation.

📊 Macro Impact and Strategy Changes

The fact that gold and deposits provide real returns directly affects not only individual investors, but also corporate portfolio management strategies. Fund managers and large-scale investors in particular have begun to weigh in on inflation-protected products. Instruments with less exposure to exchange rate volatility find more space strategically in portfolios. In addition, Turkey's tight monetary policy in line with its growth targets has increased interest in TL assets, while also reshaping risk appetite. Decreased confidence in the currency and increased savings at home stand out as important elements that support macroeconomic balances.

👥 Investor Psychology and Valuation

For investors, this picture requires walking a fine line between opportunity and risk. Real returns on gold and deposit interest reinforce the investor's hedging reflex in the short term. But the expectation that the bearish process in the currency will reverse at some point is causing some investors to discuss “bottom-buying” strategies. On the other hand, long-term losses on the stock exchange and DIBS can present serious valuation opportunities in a possible recovery scenario, although damaging investors' confidence in these instruments. While psychologically there is an increasing tendency to avoid risk, investors are also not ignoring potential opportunities.

🧠 Expert Review

The real return that gold and deposit interest provide to the investor presents an important opportunity for individuals who want to diversify their portfolio in the short term. As current interest rate policies continue, TL-based investment vehicles may retain their allure. However, the low volatility of the currency in the medium term and the possibility of an end to a long losing streak require caution in investment decisions. For long-term investors, gold still retains its safe haven identity, while a possible correction move in the currency can turn into strategic buying opportunities. It is critical that investors act in this process, not emotionally, but data-driven.

🛑 Disclaimer

This content is created by Investment Desk AI and does not constitute investment advice. You should make your decisions based on your own research and expert advisors.

stock market, usa stock news, stock news, breaking news, gold investment, deposit interest, real return, foreign exchange loss, CPI, financial market, investment strategy, euro loss, currency escape, portfolio management, interest rate policy