Foreign companies make dollar move following İmamoğlu operation

The judicial operation against Istanbul Metropolitan Municipality Mayor Ekrem İmamoğlu, which began on March 19, affected markets across Turkey as well as demand for foreign currency. According to data from the Banking Regulation and Supervision Agency (BDDK), the volume of foreign currency deposits in banks increased by 8.8 billion dollars between March 19 and 26, rising to 213.8 billion dollars. Of this increase, 2 billion dollars was seen in the accounts of individuals, while 6.8 billion dollars was seen in corporate accounts.

A significant increase in foreign currency demand occurred toward the end of March. In the week of March 21, a record increase of 5.9 billion dollars was recorded in banks, adjusted for parity effects. The following week, a total increase of 5.9 billion dollars was experienced, with 2.7 billion dollars coming from individuals and 3.2 billion dollars from companies.

The dollar exchange rate rose from the 36.6 level on March 19, when the operation began, to 42 in a historic jump. The dollar, which retreated to the 38 level with the Central Bank's (TCMB) foreign currency sales, experienced a series of fluctuations during the operation process.

RECORD WEEK IN FOREIGN EXCHANGE TRANSACTIONS

According to TCMB data, the spot foreign exchange transaction volume of Turkish banks reached an all-time high of 34.1 billion dollars on the first day of the operation on March 19. While this transaction volume fell to 16.9 billion dollars on March 20, it rose again to 32.1 billion dollars on March 21. A total of 83.2 billion dollars in spot foreign exchange transactions were conducted in the three days between March 19 and 21 following the operation.

A record was also broken in domestic interbank foreign exchange transactions during this period. A transaction volume of 18.1 billion dollars was seen on March 19, and this figure subsequently rose to 13.8 billion dollars on March 21.

MAJOR DROP IN TCMB RESERVES

Following the operation, a major drop occurred in the gross foreign currency reserves of the Central Bank of the Republic of Turkey (TCMB). While the TCMB's gross reserves decreased by 8 billion dollars to 171.1 billion dollars, its net reserves also fell by 11.8 billion dollars to 62.1 billion dollars. A decrease of 13.2 billion dollars was experienced in net reserves excluding swaps.

FOREIGNER EXODUS VIA SWAP CHANNEL

The flight of foreign investors from Turkey also gained momentum. The exodus of foreigners through the swap channel rose to 3.3 billion dollars last week. Additionally, there was a total outflow of 883 million dollars in the stock and bond markets. While net sales by foreigners in stocks amounted to 444 million dollars, there were 440 million dollars in sales in the bond market.