Macro and Politics

* We expect the February Current Account Balance to post a deficit of USD4.4bn, slightly in line with the median estimate of USD4.3bn according to the survey conducted by ForInvest. Our Year-end current account deficit forecast is USD 22bn (1.5% of GDP).

* The Treasury will hold 3m G-bond and 9y fixed coupon bond auctions today. After today’s double auctions, the Treasury will hold 4y CPI-indexed bond auction as well as the direct sales of 1y USD-denominated bond & 1y USD-denominated lease certificate tomorrow, finalizing its domestic borrowing program for April. 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.

* The CBT has released the results of the Market Participants Survey for April 2025. We have begun to observe the impact of the recent turbulence in domestic markets, starting from March 19^th, reflected in the April survey results. Accordingly, the year-end CPI inflation expectation, which stood at 28% in the March survey, has risen to 30% in April. The median monthly CPI expectation for April is set at 3.1%. However, we assess that actual inflation may exceed market expectations and could come in closer to 4%. Our year-end CPI forecast for 2025 remains at 31%. Regarding monetary policy expectations, survey participants anticipate the policy rate to stand at 42.5% by the end of April. Meanwhile, the three-month ahead policy rate expectation has decreased to 39.2%, implying that markets expect the CBT to resume its rate-cutting cycle starting in June. Moreover, participants’ year-end USD/TRY forecast has also been revised upward—from 42.80 to 43.60. The 12-month ahead exchange rate expectation currently stands at 45.85. Our year-end USD/TRY forecast remains at 45.