Turkey: CBRT net reserves decrease to 7.4 billion dollars

According to the weekly data of the Central Bank of the Republic of Turkey, total foreign currency deposits decreased by 64 million dollars in the week of June 17, adjusted for the parity effect. Compared to the previous week, foreign currency deposits of real persons decreased by 720 million dollars, while foreign currency deposits of legal entities increased by 656 million dollars.

Foreign currency deposits of domestic residents decreased by 627 million dollars last week to 212.7 billion dollars. According to BRSA data, in the same week, deposits with currency protection increased to 992 billion TRY. Last week, 962.8 billion TRY was accumulated in this instrument. The reserves of the Central Bank of the Republic of Turkey (CBRT) decreased last week. According to the CBRT data, in the week of June 17, the gross reserve decreased to 101 billion dollars. Gross reserves were recorded as $102.5 billion in the previous week. Net reserves, on the other hand, were withdrawn from $8.2 billion to $7.4 billion. Net reserve excluding swaps was also minus $53.8 billion last week. The previous week, this data was minus $54 billion.

Looking at the securities statistics of foreign investors, it was seen that the outflow continued. Foreigners sold $193 million in stocks and $145 million in bonds last week. Although most of the exits in the last nine weeks resulted from the call for volunteers from Garanti Bank, it points out that foreigners continue to leave the BIST strongly. While the global risk aversion continues, it is expected that the outflow of TRY assets abroad will continue. Even though there is a foreign outflow in the BIST due to the very low foreign share, its effect on the index remains partially limited.

The CBRT kept the policy rate unchanged at 14%. After the Central Bank’s interest rate decision, the lira continues to move in the narrow band it has entered since the middle of the month. The dollar, on the other hand, continues to rise in global markets. USDTRY’s 1-month implied volatility fell to its lowest level since mid-May as the currency calmed. At the 5-year CDS 805. The US 10-year Treasury rate fell below 3.1%.

At the current level, we will continue to follow the trends in the FX-linked product focused on dollarization, reserve cumulation and financial stability. In addition, although a breakdown of FX and TRY accounts has not been published, we consider this distinction as 55% conversion from FX to TRY and 45% direct TRY account opening in line with the statements of the Ministry of Treasury and Finance. On the other hand, efforts to finance foreign investors through swaps to invest in local assets are nearing the end. The financial dollarization rate is at the level of 56.32% as of the week of June 17, a slight decrease is observed from the rate that was 57.24% in the previous week. This rate was 55.4% in the same period of the previous year.

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