Macro and Politics

* We expect the January Current Account Balance to post a deficit of USD4.5bn, above the median estimate of USD3.3bn according to the survey conducted by ForInvest.  We would like to reiterate that we have recently revised our 2025 year-end current account deficit forecast to USD 22bn (1.5% of GDP) from USD 15bn (1% of GDP), based on the assumptions that: (i) the real appreciation of the Turkish lira will persist in 2025, albeit to a more limited extent compared to 2024, (ii) the upward trend in consumption goods imports will be sustained, and (iii) subdued demand conditions in key export markets will continue.

*The Treasury borrowed TL102.4bn in total (including non-competitive sales) from the domestic markets through auctions of a 2y fixed coupon bond and a 4y TLREF-indexed bond yesterday. The 2y fixed coupon bond auction saw a bid-to-cover ratio of 2.27x, with an average borrowing cost of 37.28%. Meanwhile, the 4y TLREF-indexed bond auction recorded a bid-to-cover ratio of 1.73x, while the term rate stood at 10.83%, indicating low demand. According to the three-month (Mar – May 25) domestic borrowing strategy, the Treasury has a total domestic redemption of TL124.7bn in March, while in return plans to borrow TL201.2bn throughout the month, via five auctions. After yesterday’s double auctions, the Treasury will hold a 7y FRN bond auction on March 17^th, and 3y CPI-indexed and 5y fixed coupon bond auctions on March 18^th, finalizing its domestic borrowing program for March.