Macro and Politics

* The CBT will release weekly foreign portfolio flows, money and banking statistics, and international reserves for the September 11 – 18 period today at 14:30 local time. Based on our calculations using the CBT’s analytical balance sheet, we estimate that gross FX reserves declined by USD4.2bn to USD174.5bn, while net FX reserves fell by USD6bn to USD56.1bn during the week. We expect today’s official data to confirm a decline in reserves broadly in line with our analytical balance sheet-based estimates. To recall the previous week’s data: Foreign investors returned to the equity market with net purchases of USD277.7mn in the September 4–11 week, while adding a further USD151.2mn to their bond holdings, excluding repo transactions. Moreover, foreigners’ share in the total bond stock remained unchanged at 7.2% over the same period. Over the same period, residents’ FX deposits (excluding gold and adjusted for the EUR/USD parity effect) increased by USD1.1bn, driven by a rise in corporate FX deposits, while their total FX deposits (including gold, adjusted for the price effect) increased by USD1.8bn in the September 4–11 week. The CBT’s FX reserves declined in the September 4–11 week. Gross FX reserves fell by USD5.5bn to USD178.7bn, while net FX reserves decreased by USD3.4bn to USD62.1bn. The swap stock edged up by USD4mn to USD12.3bn over the same period, while net reserves excluding swaps declined by USD3.4bn to USD49.9bn.

* According to the September Sectoral Inflation Expectations (SIE) Survey, 12-month-ahead annual inflation expectations edged up by 0.02pp to 45.60% for households, while declining by 0.30pp to 32.50% for the real sector. Expectations among market participants, meanwhile, remained unchanged at 23.7%. The share of households expecting inflation to decline over the next 12 months also fell by 0.60pp to 16.25%. The September results point to a modest improvement in real sector inflation expectations, while highlighting the continued stickiness in household expectations.