Macro and Politics

* The Treasury will hold direct sales of a 1y USD-denominated bond, a 2y gold-denominated bond, and a 2y gold-denominated lease certificate today. The Treasury sold TL24.1bn at the direct sale of 2-year lease certificate yesterday, bringing total domestic borrowing since the beginning of the month to TL157.7bn. Following today’s direct sales, the Treasury will conduct 2y and 5y fixed coupon bond auctions on April 21 and finalize its domestic borrowing program for the month. According to the domestic borrowing strategy for the 3-month period covering April – June 2026, the Treasury plans to conduct TL480.1bn in domestic borrowing against TL505.4bn in redemptions in April, implying a rollover ratio of 95%.

* The current account posted a deficit of USD7.5bn in February, broadly in line with our house forecast of USD7.4bn. As a result, the 12-month cumulative current account deficit widened to USD35.5bn from USD33.2bn. Excluding gold and energy, the current account balance (core balance) recorded a deficit of USD1.5bn in February, while the rolling 12-month surplus in this measure declined to USD30.8bn from USD33.6bn. We expect the current account to post a deficit of USD10.4bn in March. We forecast the balance-of-payments-defined foreign trade deficit to widen to USD9.9bn, while net revenues from travel are projected to increase modestly to USD2.1bn, with the overall services surplus estimated at around USD2.4bn. Please recall that, in light of rising energy prices following the US – Iran tensions, we have revised our year-end current account deficit forecast to USD45bn (2.6% of GDP). However, given persistently elevated global energy costs and the ongoing uncertainty, we reckon with a clear upside risk to our forecast.