Macro and Politics

*Turkey energy watchdog EPDK announced on Friday that electricity prices will rise by 25% for residential users, 5% for public and private services, 10% for industrial users and 12.4% for agricultural activities, due to increasing energy production costs, effective from April 5. The direct impact of the price increase on the CPI will be around 0.4486pp. Considering the indirect effects, we anticipate a higher overall impact on headline CPI. As result we expect the market consensus for April CPI to rise towards 4% levels in the wake of the electricity price rise.

*The Treasury will hold a 2y fixed coupon bond auction today. According to three-month (April – June 2025) domestic borrowing program, the Treasury has a domestic redemption of TL293.3bn in April, while in return it plans to borrow TL329.5bn in total throughout the month via six auctions and three direct sales. After today’s single auction, the Treasury will hold 1y TLREF-indexed and 4y fixed coupon bond auctions as well as a direct sale of 2y lease certificate tomorrow.

* The CBT will release the weekly portfolio flows and money & banking statistics for the period of March 21 – 28 @ 14:30. Due to last week’s public holiday, weekly portfolio flows and money & banking statistics data, typically released alongside the reserves data in every Thursday, will be published today. To recall the previous period’s data: In the week of March 14 – 21, the equity and the bond market (excluding repo transactions) experienced a net foreign outflow of USD443.8mn and USD439.5mn, respectively. Besides, the foreigners’ share in total bond stock dropped from %8.3 to 7.6%. During the same period, residents’ FX deposits climbed by USD5.8bn (excluding gold accounts and adjusted for the EUR/USD parity effect), while their total FX deposits (including gold, price adjusted) increased by USD5.86bn in the week of March 14 – 21.

*The Real Effective Exchange Rate (REER) decreased from the revised level of 75.1 to 73.48 in March, in line with our calculations. This decline reflects a 2.2% real depreciation of the Turkish lira, following the weakening of TL assets amid heightened domestic political tensions since March 19. It’s worth noting that the lira also depreciated in February, albeit marginally by 0.2%, marking the first real-term decline since August. Despite this, the TL has appreciated by 1.5% in real terms over the first quarter of the year (January–March).

* During the week of March 21 – 28, the CBT’s the gross FX reserves slid by USD6.6bn to USD156.7bn and the net international reserves decreased by USD6bn to USD56bn. Total swap stock climbed by USD8.5bn to USD18.3bn, while net reserves excluding swaps tumbled further by USD14.5bn to USD37.7bn.