Page 13 - TURKRptDec20

“Market pursuing volatility” ​Data from the central bank on Turkish banks’ FX transactions shows that there was some action in both foreigners’ and locals’ spot FX transactions starting from November 9.
There has also been an increase in local banks’ FX swaps with foreign counterparts.
In general, there was an increase in activity in the FX/TRY market with the biggest move on November 9.
Currency volatility has shown some signs of retreat since the MPC meeting but it remains high.
BDDK data also showed that the state banks’ short FX position declined to $4.24bn as of November 13 from $5.06bn as of November 6 and $5.2bn on October 30.
The central bank has also stopped shorting USD-TRY contracts on the Borsa Istanbul derivatives market.
There is talk of “strengthening central bank reserves” but it is unknown at this point how all the financial troubles will be simultaneously solved as they require contradictory policies.
There is an effort to solve the short-term FX shortage with portfolio flows but foreign players are arriving for short-term currency gains. If the central bank and state banks buy FX, then taking the Turkey risk will not be meaningful.
13​ TURKEY Country Report​ December 2020 ​ ​www.intellinews.com