Record drop in Central Bank reserves

The effects of the volatility in financial markets following the political developments in late March were also reflected in the April balance of payments and reserve figures. According to data from the Central Bank of the Republic of Turkey (TCMB), the current account posted a deficit of 7 billion 864 million dollars in April. This figure was recorded as the highest monthly current account deficit in the last two years. Expectations were at the 7.5 billion dollar level.

The portfolio outflows that accelerated after March 19 and the Central Bank's foreign exchange sales were decisive in this high deficit experienced in April. The TCMB's foreign exchange reserves decreased by 24 billion 988 million dollars in April alone. Experts emphasize that a reserve loss of this magnitude is unprecedented in history.

FOREIGN TRADE DEFICIT ALSO INCREASED

In April, the current account excluding gold and energy posted a deficit of 1 billion 938 million dollars. The foreign trade deficit stood at 9 billion 891 million dollars. In the same month of the previous year, this figure was 7 billion 695 million dollars.

While net inflows from the services balance amounted to 3 billion 903 million dollars, 1.6 billion dollars were generated from transport services and 3.1 billion dollars from travel revenues. In the direct investment item, there was a net outflow of 268 million dollars. While direct investments by non-residents in Turkey amounted to 408 million dollars, investments by residents abroad increased by 676 million dollars. In real estate investments, it was observed that residents made net purchases of 232 million dollars abroad, while non-residents made net purchases of 140 million dollars in Turkey.

Foreign investors made net sales of 147 million dollars in the stock market and 6.43 billion dollars in government domestic debt securities in April. Banks, the general government, and other sectors also made significant sales in foreign bond issuances. Banks repaid 10.83 billion dollars in loans they had utilized from abroad.

On the deposit side, while there was an increase of 861 million dollars in foreign currency deposits in April, an outflow of 327 million dollars was seen in TL deposits. Thus, a net increase of 534 million dollars occurred in total foreign currency deposits.

The decrease of 24 billion 988 million dollars in official reserves made April stand out as the highest reserve loss in history. There was an inflow of 230 million dollars from the net errors and omissions item. In the first four months of the year, a total of 6.6 billion dollars flowed out from this item, and 11.79 billion dollars on an annualized basis.

Looking at the annualized data, the current account deficit rose to 15.8 billion dollars as of April. In the same period last year, this figure was 12.8 billion dollars. The foreign trade deficit rose to 60.4 billion dollars on an annual basis. In the financing of the current account, net direct investments contributed 4.3 billion dollars, net portfolio investments 0.8 billion dollars, loans 25 billion dollars, and trade credits 3.8 billion dollars. In contrast, net effective and deposits created a negative impact of 17.1 billion dollars. The Central Bank's net reserve decrease in foreign currency was 10.9 billion dollars.

In the first four months of the year, the current account deficit reached 20.3 billion dollars, and the foreign trade deficit reached 25.77 billion dollars. During the same period, while there was a total decrease of 36 billion 583 million dollars in Central Bank reserves, 25 billion dollars of this stemmed from the loss in April alone.