Turkish depositors have switched funds back to dollars when withdrawing from state depreciation-protected accounts, as Ankara winds down the scheme in a policy U-turn.

The U-turn has boosted interest rates and set an objective of decreasing the $130 billion in lira held at KKM accounts since President Erdogan’s re-election.

The lira has lost 50% of its value since the scheme’s introduction, raising scheme costs and weakening currency confidence.

Two senior bankers told that the central bank has sold forex to lenders since the election to accommodate KKM account closure demand.