Investment bank projects rising Central Bank reserves

Barclays, one of the leading investment banks in England, projected in its emerging markets research report that the increase in the foreign exchange reserves of the Central Bank of the Republic of Turkey (CBRT) is expected to continue.

After Moody’s, Barclays, one of the leading banks in England, stated that the increase in the CBRT’s foreign exchange reserves is expected to continue: “We expect an additional recovery of 17 billion dollars in foreign currency reserves from mid-August to the end of 2024” the report predicts.

“We expect an additional $17 billion improvement in foreign currency reserves from mid-August to the end of 2024,” Barclays said in its report.

“Since the elections, the CBRT has increased its gross reserves by $17 billion, but we expect the trend to slow down  to add another $2 billion for the rest of the year, as seasonality reverses in the fall. Our methodology shows an additional $14 billion recovery in reserves in 2024. The improvement in foreign exchange reserves will be even greater if financing flows from the UAE come in a more front-loaded way than we expected.” it said.

In the annual analysis of the international credit rating agency Moody’s on the Turkish economy, it wrote: “Before the elections, the CBRT intervened to limit the rate of depreciation in the exchange rate. This led to significant decreases in reserves. But the evidence shows that major currency interventions are now over”

In the analysis, it was claimed that the market-induced depreciation of the Turkish lira helped exporters regain their competitiveness, while enabling the CBRT to regain its foreign exchange reserves.

 

Reserves rose for the   8th week

 

Meanwhile, the gross reserves, which were at the level of 98.5 billion dollars as of the end of May this year, rose to 115.6 billion dollars as of the week of 4 August.

While the upward trend in reserves was carried over to the 8th week in a row, the increase in reserves in the last 2 months reached 17.1 billion dollars. In this period, net reserves increased by $20.1 billion to $15.7 billion.

 

Analysts drew attention to the fact that the increase in reserves continued in August, when the return on Currency Protected Deposits (KKM) was at a record level, and stated that the steps taken by the economy administration after the election were effective in this course.

 

On the other hand, Turkey’s 5-year credit risk premium (CDS), accelerated its decline and fell below 400 basis points, after CBRT President Dr. After Hafize Gaye Erkan’s statements at the Inflation Report Information Meeting on July 27.

 

Analysts stated that this decrease in CDS level reflects the interest of foreign investors in Turkey. This interest reflected in the market indicators was also observed at the JP Morgan Turkey Economic Forum meeting, where Treasury and Finance Minister Mehmet Şimşek and CBRT President Erkan met with foreign investors.

 

Source:  Barclay’s, TCMB FX rezervlerinde patlama bekliyor!

 

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Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and www.paraanaliz.com and has contributed to the financial daily Referans and the liberal daily Radikal.