RISK ASSESSMENT FROM S&P
US-based credit rating agency Standard & Poor’s (S&P) has published an assessment regarding the political developments in Turkey. S&P stated that the arrests could pose a risk to confidence in the Turkish economy and the stability of the exchange rate.
The assessment noted that since the end of 2023, Turkish authorities have made significant progress in convincing households to shift their savings from gold and foreign currency back into the local currency. This, according to S&P, has contributed to an increase in the country’s foreign exchange reserves and supported Turkey’s credit rating by promoting a decline in inflation.
However, S&P warned that the return of political tensions could disrupt these reforms. The agency stated that the Central Bank of the Republic of Turkey’s recent emergency interventions have led to increased foreign exchange sales, higher liquidity, and a rise in forward transactions, along with an increase in the overnight borrowing rate.
S&P stressed that the second round effects of heightened uncertainty on household spending, capital inflows, the exchange rate, growth and inflation could be significant, interrupting a notable decline in deposit dollarization and inflation until recently.
FOREIGN INVESTORS ARE PULLING OUT
Financial Markets Expert İris Cibre noted that the Central Bank’s interventions have kept the exchange rate at around 38 lira and offered the following assessment:
“The collapse in financial markets that began on Wednesday with the news of İmamoğlu’s detention has slowed somewhat amid high volatility. The measures taken by the Central Bank during the week and the Capital Markets Board (SPK) at the weekend, along with the Central Bank meeting demand at the 38 lira level to create a resistance wall, and public banks constantly absorbing sales on the stock exchange side, have played a role in easing the panic. With Turkish lira liquidity being withdrawn, yields have also risen. TLRef occurred at 45.97%, at the upper end of the corridor. However, bonds remain the only area where no intervention has been made, and the fire is still burning there. The 2-year bond yield stands at 51.34%, while the 10-year bond yield has hit a record high at 33.61%. Foreign investors are selling in both the stock and bond markets.”
LOCALS FLOCK TO FOREIGN CURRENCY
According to data from the Banking Regulation and Supervision Agency (BDDK), on 19 March the day İmamoğlu was taken into custody foreign currency deposits increased by $1.4 billion, reaching $206.4 billion. On the same day, the exchange rate rose by 3.3%, with the USD/TRY rate hitting record levels. It is estimated that the Central Bank of the Republic of Turkey’s (CBRT) foreign exchange reserves dropped by over $14 billion in just two days due to the foreign currency sales that began following İmamoğlu’s detention. It was reported that foreign exchange sales continued to increase on Friday compared to Thursday, and total sales throughout the week are estimated to have exceeded $20 billion.
MARCH 19 WILL ALSO BE BILLED TO CITIZENS
CHP Mersin Deputy Gülcan Kış described the sharp collapse in the country’s economy as the “March 19 Civil Coup” and said, “The palace regime’s love for seats cost the country trillions in one day. After the crisis, the 26 billion dollar reserves accumulated by the Central Bank with the austerity policy of the people were burned. With this money, each pensioner could have been given a 41 thousand lira bonus. Or one Osmangazi Bridge, one Yavuz Sultan Selim Bridge, one Ataturk Dam, three Eurasia Tunnels could have been built and 787 lira more bonuses could have been distributed to pensioners.” Kış summarized the destruction as follows: “Borsa Istanbul lost 7.1 percent in the July 15 coup attempt, 11.3 percent in the February 6 Kahramanmaraş Earthquake, and 16 percent in just a few days in the judicial coup on March 19. In other words, this political intervention has caused greater economic destruction than either a natural disaster or a military coup attempt. Turkey’s economy has collapsed for the sake of one person’s political ambitions.”
32 COMPANIES CARRIED OUT SHARE BUYBACKS
On Friday, 21 March the day the BIST 100 index lost nearly 8% in value 32 companies conducted share buybacks. According to BloombergHT, companies repurchased shares worth a total of 340.7 million TL. Among these, BİM led with the highest buyback amounting to 106.2 million TL. BİM was followed by Gübre Fabrikaları with 51 million TL and Turkcell with 50 million TL.
Note: This article is translated from the original Turkish version titled Merkez Bankası gemileri yaktı, published in BirGün newspaper on
