Macro and Politics

* The CBT will release weekly foreign portfolio flows, money & banking statistics, and international reserves for the period of January 23 – 30 @ 14:30 local time. Based on our calculations derived from the CBT’s analytical balance sheet, we estimate that during the week of January 23 – 30, the CBT’s gross FX reserves rose by USD2.6bn to USD218.3bn, reaching a new record high, while net international reserves dropped around USD3bn to USD94bn. We expect the official figures to broadly validate our calculations. To recall the previous week’s data: Foreign investors posted strong net inflows in the week of January 16 – 23, purchasing USD490.6mn in equities and USD1.26bn in government bonds (excluding repo transactions). As a result, the foreign share in the total domestic bond stock increased from 8% to 8.6%, marking its highhest level since January 2025. Moreover, during the mentioned week, the residents’ FX deposits eased a tad by USD60mn (excluding gold, EUR/USD parity effect adjusted), while their total FX deposits (including gold, price adjusted) increased by USD1.8bn during the week of January 16 – 23. In terms of official reserves, the CBT’s gross FX reserves soared by USD10.5bn to USD215.7bn, net international reserves surged by USD6.3bn to USD97.2bn and net reserves excluding swaps increased by USD6.7bn to USD85.3bn.

* The real effective exchange rate (REER) rose in January in line with our expectations, climbing from 99 to 102.2 and pointing to a 3.4% real appreciation of the Turkish lira. The move was primarily driven by higher CPI inflation relative to nominal exchange rate depreciation. As a result, the Turkish lira registered a real gain against the equally weighted currency basket in January, following two consecutive months of real depreciation.