Macro and Politics

* The CBT will release weekly foreign portfolio flows, money & banking statistics, and international reserves for the period of March 27 – April 3 @ 14:30 local time. Based on our calculations uopn the analytical balance sheet, we estimate that in the week of March 27 – April 3, the CBT’s gross FX reserves increased by USD6.7bn to USD162.2bn, while net FX reserves rose by USD11bn to USD46bn. This implies that, following four consecutive weeks of decline since the onset of the war – amounting to a cumulative drop of USD55bn in gross reserves and USD56.7bn in net reserves – reserves posted a partial recovery in the latest week. We expect the official data to be released today to broadly confirm this increase. Yet, we also underline that the rise we calculate in reserves appears to be driven primarily by local swap transactions. Hence, we continue to expect a further decline in the net reserves excluding swaps. To recall the previous week’s data: Foreign investors were net buyers in equities, albeit modestly, with inflows of USD137.1mn in the week of March 20 – 27, while continuing to unwind positions in the bond market, recording USD1.4bn in net outflows (excluding repo transactions). The foreign share in the total government bond stock declined to 6.1% from 6.7% over the same week. Moreover, the residents’ FX deposits (excluding gold, EUR/USD parity effect adjusted) declined by USD178mn, while their total FX deposits of residents, including gold and adjusted for price effects, increased by USD2.2bn during the week. Lastly, the CBT’s gross FX reserves declined by USD22.1bn to USD155.4bn, while net FX reserves fell by USD22.3bn to USD35bn over the same period. The gold component of gross reserves decreased from USD116.2bn to USD100bn. Meanwhile, the swap stock increased by USD479mn to USD14.9bn, while the net reserves excluding swaps dropped by USD22.8bn to USD20.1bn.