Macro and Politics

* The CBT will release weekly foreign portfolio flows, money & banking statistics, and international reserves for the period of June 13 – 20 @ 14:30 local time. Based on our calculations upon the CBT’s analytical balance sheet, we estimate that during the week of June 13 – 20, net international reserves slid by USD5.46bn to USD49.3bn, while gross FX reserves dropped by USD3.65bn to USD155.8bn. Accordingly, our estimates suggest that the six-week streak of reserve accumulation came to a halt last week. We expect today’s official figures to confirm a decline in line with our projections. To recall the data from the previous week: In the week of June 6 – 13, foreigners registered a net purchase of USD475mn in equities and USD580mn in government bonds (excluding repo transactions). This marked the ninth consecutive week of foreign inflows into the equity market, while the bond market saw a return to net foreign buying following two weeks of outflows. As a result, the foreigners’ share in total bond stock edged up from 4.8% to 5.1% within the mentioned week. During the week of June 6–13, residents’ FX deposits rose by USD 2.6bn (excluding gold accounts and adjusted for the EUR/USD parity effect), while their total FX deposits (including gold, price adjusted) increased by USD2.9bn during the week of June 6 – 13. Besides, The CBT’s gross FX reserves rose by USD3.4bn to USD159.5bn and net international reserves climbed by USD2.6bn to USD54.8bn, while net reserves excluding swaps surged by USD2.9bn to USD35.4bn.

* According to the results of the June Sectoral Inflation Expectations Survey, 12-month ahead inflation expectations declined across all surveyed groups compared to the previous month: falling by 0.5pp to 24.6% for market participants, by 1.2pp to 39.8% for the real sector and by 6.9pp to 53% for households. It should be noted, however, that the impact of the Israel–Iran conflict and its potential implications for global energy costs were not fully reflected in the June results. Therefore, the extent to which this marked improvement in inflation expectations will carry into July remains a key point of focus.