On July 15, 2016, the day of the botched coup attempt in Turkey, the foreign-exchange bank deposits of Turkish citizens and companies totaled $191 billion. The putsch worsened the country’s already troubled economic outlook, stoking concerns of political and economic instability. In the ensuing months, international credit rating agencies cut Turkey to non-investment grade, while global factors contributed to a drastic slump in the Turkish lira, which further compounded the problems. President Recep Tayyip Erdogan described the downturn as an economic coup that sought “to bring Turkey to its knees.” He urged citizens and institutions to convert their foreign exchange savings to Turkish liras.

As of Dec. 30, 2016, Turkey's foreign exchange deposits had declined by about $17 billion to $174 billion. In fact, the dollar and the euro had appreciated so much against the Turkish lira that exchanging them at those rates was quite profitable.

In the past several months, however, the tide seems to have turned. According to central bank figures released May 12, foreign exchange deposits stood at $195 billion, up from $173 billion Jan. 6. In other words, deposits increased by $22 billion over five months, a trend that seems to have picked up ahead of and after the April 16 referendum. From Jan. 6 to Feb. 3, the total increased by $7 billion to $180 billion. On April 14, just before the eve of the referendum, deposits reached $188 billion, and rose further to $194 billion on April 28.

The revenue brought in by Turkey’s main foreign exchange earners — the tourism sector, exporters, and contractors working overseas — has been on the decline for some time. One cannot help but wonder how foreign exchange deposits have increased while foreign exchange earnings have decreased. Where did the foreign exchange come from?