Page 12 - TURKRptFeb21

$7bn in November, $5bn in December and $2bn in January.
There are calls to increase the banks’ swap limits (for transactions in which they provide USD and receive TRY at spot) but the government has not responded to those calls as yet due to insufficient central bank reserves.
Due to excess lira liquidity in London, offshore market lira rates remain below the central bank’s policy rate.
There is also talk of rebuilding the reserves in finance media. Bloomberg reported on January 13 that the central bank’s FX sales to state-run natural gas importer Botas had fallen to $167mn in November and December, down from an average $958mn for the same period in the previous five years.
If the central bank saves $2bn each month via its rediscount export credits and Botas transactions, it would recover the $139bn in reserves it burnt through in defending the lira in around 70 months.
In less than 25 months, its net reserves excluding swaps would turn positive.
According to Burumcekci, the central bank’s net FX purchases in rediscount export credits and Botas transactions amounted to $96.5bn in the 12 years since 2009.
The government-run banks’ net FX deficit, meanwhile, has declined by around $5bn since November, although this does not mean Turkey is ready for an upcoming hot money outflow cycle.
The previous $5bn decline in the net FX deficit of these banks in August was due to FX-denominated domestic government bond purchases, but the finance media reports it as a $10bn recovery. Because, it sounds more “positive”.
HSBC’s short USD/TRY position in selling USD against the Turkish lira (TRY), which it opened on January 5 with a target of 7.10 and a stop-loss of 7.53, became history within two weeks after the USD/TRY on January 18 moved beyond the British bank’s stop-loss level.
HSBC “lost a nominal 1.9%”.
The most popular Turkish exchange traded fund (ETF), the iShares MSCI Turkey, saw sales of $30.8mn in the first two weeks of 2021.
Turkish ETF investors bought in at very attractive levels in the period prior to the recent Turkish lira and Borsa Istanbul rallies that began on November 9, with the declared change in direction of Turkey’s monetary policy towards tightening. Calls for a correction in prices are spreading.
12 TURKEY Country Report February 2021 www.intellinews.com