Weekly Monetary Aggregates Report:  Foreigners are back, domestics still topping up FX deposits 

By Gedik Invest Research

In the week of May 16, a USD 2.3 billion increase in net reserves excluding swaps, a USD 1.9 billion purchase of government domestic debt securities (GDDS) by non-residents, and an USD 865 million rise in FX deposits stood out. Based on the CBRT’s Analytical Balance Sheet, we estimate a USD 7.2 billion increase in net reserves excluding swaps as of May 22. The weekly developments can be summarized as follows:

➢ Parity-adjusted FX deposits increased by approximately USD 865 million, driven by USD 87 million in individual sales and USD 951 million in corporate purchases. This marked a reversal after a cumulative USD 1.7 billion decline in the previous three weeks. From the week of March 29, 2024, to the end of January 2025, FX deposits had dropped by USD 28.5 billion.

➢ FX-protected deposit (KKM) balances declined by TRY 29.8 billion (USD 0.9 billion), falling to TRY 596 billion. The cumulative unwind from the August 2023 peak has now reached TRY 2.8 trillion (USD 121.1 billion).

➢ The share of FX deposits + KKM in total deposits declined from 42.3% to 41.1%. This ratio had peaked at 68.4% in August 2023 when KKM balances were at their highest.

➢ TL deposits increased by TRY 443 billion during the week, bringing the total to approximately TRY 13.5 trillion.

➢ FX loans decreased by USD 800 million over the week. However, since the end of March 2024, FX loans have risen by 37.2% (USD 49.5 billion), reaching USD 184.2 billion.

➢ The annualized 13-week average loan growth shows a slowdown in both segments: commercial loans declined from 27.4% to 26.6%, while consumer loans fell from 42.8% to 36.0%.

➢ Non-residents recorded a USD 1.9 billion net purchase of GDDS, bringing the total stock to around USD 11.9 billion. Since the week of March 19, cumulative inflows stand at USD 6.5 billion, of which USD 1.25 billion originated from the foreign branches of Turkish banks. In equities, non-residents posted a USD 245 million net purchase, raising the total stock to USD 29.4 billion.

Conversely, in the Eurobond market, there was a net sale of USD 588 million, keeping the stock around USD 109.6 billion. Since early March, Eurobonds have seen cumulative net outflows of approximately USD 4.7 billion.

➢ In the week of May 16, gross reserves rose by USD 1.3 billion, from USD 144.3 billion to USD 145.6 billion. Net reserves increased by USD 2.4 billion, reaching USD 40 billion, while net reserves excluding swaps rose by USD 2.3 billion to USD 20.4 billion. This marks a second consecutive week of increase following a cumulative USD 57.6 billion decline in net reserves excluding swaps between February 14 and May 2. The lowest level was recorded at -USD 65.5 billion at end-March 2024.

➢ According to the CBRT’s analytical balance sheet, as of May 22 (covering the first four days of the week), gross reserves rose by approximately USD 6.6 billion, and both net reserves and net reserves excluding swaps increased by USD 7.2 billion. This indicates a three-week streak of weekly gains in net reserves excluding swaps. The rise in gold prices during the week also positively contributed to reserve growth.

➢ The size of the Money Market Fund (MMF) increased by TRY 45 billion, reaching TRY 898.5 billion. As of March 14, the total active size of MMFs stood at approximately TRY 1.42 trillion. MMFs under the Hedge Umbrella Fund rose by TRY 19 billion over the week, reaching TRY 852.7 billion. The total active size of FX funds increased by USD 240 million, reaching USD 56.4 billion. At the start of 2024, this figure was around USD 25 billion, implying a USD 6.4 billion increase over the past 8 weeks. Including investment funds, the dollarization ratio declined from 44.2% to 43.1% in the week of May 16. This ratio was around 59% at the beginning of the year.