Turkey’s Corporate FX Deficit Hits 7.5-Year High

Turkey’s non-financial corporate sector foreign currency (FX) deficit rose to its highest level since July 2018, reaching nearly $198 billion in January 2026, according to central bank data. The sharp increase reflects a surge in FX liabilities, outpacing relatively stable asset levels, while firms continue shifting toward longer-term borrowing to manage currency risk. However, weakening short-term buffers point to rising financial fragility.

FX Gap Widens Sharply in January

Data released by the Central Bank of the Republic of Türkiye (CBRT) show that the net FX position deficit of non-financial firms climbed to $197.6 billion in January 2026.

This marks the highest level in more than seven years and underscores a continued deterioration in corporate balance sheets driven by rising foreign currency liabilities.

While FX assets declined only marginally, liabilities recorded a significant increase, widening the overall deficit.

Liabilities Surge as Assets Stagnate

In January:

• Total FX assets fell by $558 million
• FX liabilities jumped by $8.6 billion

The composition of assets reveals mixed dynamics:

• Derivative assets increased by $1.59 billion
• Overseas direct investments rose by $681 million

However, these gains were offset by declines in:

• Export receivables (down $1.86 billion)
• Bank deposits (down $668 million)

The result was a net contraction in FX asset holdings, while liabilities expanded sharply.

Shift Toward Long-Term Borrowing

The maturity structure of corporate debt indicates a clear preference for longer-term financing.

In January:

• Long-term domestic loans increased by $2.7 billion
• Long-term external loans rose by $1.95 billion

This suggests that firms are attempting to spread currency risk over longer horizons, reducing immediate rollover pressures.

Short-Term Buffers Are Weakening

Despite the move toward longer maturities, short-term FX indicators point to emerging vulnerabilities.

As of January 2026:

• Short-term FX assets stood at $147.7 billion
• Short-term FX liabilities reached $141.2 billion

This left a net short-term FX surplus of $6.56 billion, down by $5.1 billion from the previous month.

The decline indicates that corporate liquidity buffers are eroding.

Short-term liabilities accounted for 37% of total FX obligations, suggesting a still-significant exposure to near-term refinancing risks.

Implications for the Economy

The widening FX deficit and weakening short-term buffers carry several risks:

1. Increased currency vulnerability
A larger FX gap leaves firms more exposed to exchange rate volatility.

2. Refinancing pressures
Although long-term borrowing is rising, short-term obligations remain substantial.

3. Balance sheet risks
Declining export receivables and deposits reduce natural hedging capacity.