The Central Bank was on the agenda of the markets yesterday. In the survey of market participants published on the day when the bank’s net reserves fell to its lowest level in 21 years, while inflation expectations declined, Chairman Şahap Kavcıoğlu gave the message that the liraization strategy would continue. On the same day, the Central Bank, which took a new step to reduce the demand for foreign exchange in the market, reduced the daily foreign exchange purchase limit of banks by 25 percent. In the new implementation instruction sent by the Central Bank to the banks, a limit of 15 thousand TL was determined in the securities regulation regarding cash advances, overdraft accounts and jewelery expenditures made by card. Meanwhile, Currency Protected Deposit Accounts increased from 2 trillion 203.1 billion TL to 2 trillion 346.8 billion TL in the week of May 12. KKM increased by 31 billion dollars in 1.5 months With the record demand that started with the removal of the upper limit of interest on currency-protected deposit accounts, an increase of 31.1 billion dollars was seen in the 1.5 months before the election. According to BRSA data, KKM, which was 88.8 billion dollars on 31 March, rose to 119.9 billion dollars in the week of 12 May. KKM now constitutes an important part of the 531.8 billion dollar foreign exchange and TL deposits. Bankers predict that redemptions in KKM will approach $10 billion each week, and interest in these interests will remain high. “Liraization strategy will continue” The Central Bank has published the May period market participants survey. Making evaluations in the introduction part of the report, Central Bank Governor Şahap Kavcıoğlu said, “All the steps we have taken since the beginning of 2022 within the framework of our Liraization Strategy are formed with a perspective that will ensure permanent price stability together with financial stability. In this context, we aim to permanently increase the share of the Turkish lira in the financial system and to make all investments in the country. “We are implementing policies to ensure that trade and trade transactions are shaped around the Turkish lira. As a matter of fact, the steps we have taken have started to yield results,” he said. Inflation expectations fell While the current year end consumer inflation (CPI) expectation of the participants in the market participants survey organized by the Central Bank was 37.77 percent in the previous survey period, it became 37.17 percent in this survey period. While the 12-month CPI expectation was 31.02 percent in the previous survey period, it became 29.84 percent in this survey period. The CPI expectation after 24 months was realized as 17.54 percent and 17.74 percent, respectively, during the same survey periods. While the participants’ current year-end dollar rate expectation was 23.15 TL in the previous survey period, it was 23.09 TL in this survey period. While the expectation of the dollar exchange rate after 12 months was 24.08 TL in the previous survey period, it was 24.61 TL in this survey period. Net reserves at 21-year low Gross reserves of the Central Bank fell by $9 billion to $105.1 billion in the week before the election. Net international reserves of the CBT fell by $4.45 billion last week, the last week before the elections, to $2.33 billion, the lowest level since February 2002. Net reserves have thus decreased by $25.22 billion since the beginning of the year. Net reserves declined in 13 of the 19 related weeks. Banks purchase limit has been reduced The Central Bank took a new step towards reducing the foreign exchange demand. The daily foreign exchange purchase limit of banks has been reduced by 25 percent. In addition, banks were asked to direct companies’ non-urgent foreign exchange demand to TL-settled forward foreign exchange contracts. As the maturity date for currency-protected deposit accounts, the demand for foreign currency increased. The steps of the Central Bank are considered as an effort to stop this demand. 15 thousand TL limit for cash advance arrangement In the new implementation instruction sent to the banks by the Central Bank, the Central Bank set a limit on the securities regulation regarding cash advances, overdraft accounts and jewelery expenditures made by card. According to the new implementation instruction, cash advances, overdraft accounts and jewelry expenditures made with cards up to TL 15 thousand will not be covered by the securities liability. Foreigners sold $135.1 million worth of shares last week The Central Bank has published Weekly Securities Statistics. Accordingly, non-residents sold net 135.1 million dollars of stocks and 31.3 million dollars of Government Domestic Debt Securities (GDS) in the week of May 12, while they bought 1.1 million dollars of Company Debt Securities (CIS). The stock of non-residents, which was 22 billion 501.7 million dollars as of May 5, increased to 24 billion 936.2 million dollars as of 12 May.
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