Turkey: According to the parity adjusted data, foreign currency deposits of domestic residents increase

According to the weekly data of the Central Bank of the Republic of Turkey, total foreign currency deposits increased by 1.52 billion dollars in the week of July 8, adjusted for the parity effect. Compared to the previous week, foreign currency deposits of real persons increased by 593 million dollars, while foreign currency deposits of legal entities increased by 923 million dollars.

Looking at the FX deposits of domestic residents, a nominal decrease of 1.1 billion dollars was recorded in the week of July 8. Thus, foreign currency deposits amounted to 208.8 billion dollars. When foreign currency deposits are analyzed by adjusting for the parity effect, an increase was observed in foreign currency deposits of real and legal persons. According to BRSA data, as of the week of July 8, the total of protected deposits was TRY 1.07 trillion.

The Central Bank of the Republic of Turkey (CBRT) net reserves fell to the lowest level in 20 years. According to the CBRT data, as of the week of July 8, net reserves were recorded as 6.1 billion dollars. The previous week, this figure was 7.5 billion TL. The CBRT’s gross reserves were recorded as 98.7 billion dollars as of the same week. A realization of $100.9 billion was recorded in gross reserves in the previous week. The CBRT’s net reserve excluding swaps was negative 54.8 billion dollars in the week of July 8. Net reserve excluding swaps was minus $54.3 billion the previous week.

Foreigners continue to exit TRY assets regularly. With the global risk aversion, it is expected that the outflow of TL assets abroad will continue. While the Turkish Lira continues its losses against the dollar, it continues to decouple negatively from the currencies of developing countries. Attention is turned to the interest rate decision that the Central Bank will announce today, and we do not expect any changes. USD/TRY remains above 17.59, the highest level since December. The lira’s depreciation against the dollar has exceeded 24% since the beginning of the year. While the 5-year CDS was 838 basis points, the 10-year bond yields fell to 17.5%.

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 that this distinction is 55% conversion from FX to TRY and 45% direct TRY account opening in line with the statements of the Ministry of Treasury and Finance. The financial dollarization rate is at the level of 54.39% as of the week of July 8, there is no change from the rate that was 54.39% in the previous week. This rate was 55.5% in the same period of the previous year.

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