Should they stay or should they go?

I’m talking about foreign investors, the ones who invest in Turkey through stocks and government debt securities.

They seem to be conflicted. They neither want to make huge amounts of investment, nor they want to leave Turkey for good.

Data from the last seven weeks signal a serious stagnation. Foreigners bought a total of USD 168.5m worth of stocks and USD 435.4m worth of government debt securities between April 22 and June 11. That’s all there is. The total amount stands at USD 604m, while the weekly average is USD 86m.

Let’s note this once again: foreigners bought USD 33.5m worth of stocks and USD 80.3m worth of government debt securities last week.


The Central Bank was at ease during the meeting last week. The Bank had no pressure for a rate cut.

Let’s go back to two weeks earlier. President Erdogan reiterated his view about lower interest rates and aimed for July and August for a possible rate cut during a TV program on TRT.

Now, we have a very critical period ahead of us. The Central Bank Monetary Policy Committee’s (MPC) next two meetings will be held on July 14 and August 12.

Since Erdogan has signaled for a rate cut from time to time, the July 14 meeting will be crucial.

On one hand, there’s Erdogan, who made his perspective very clear on the interest rate, and on the other, there’s the Central Bank which continuously states that a rate cut is impossible under current circumstances. This is what the Bank says:

“The CBRT will continue to use decisively all available instruments in pursuit of the primary objective of price stability. The policy rate will continue to be determined at a level above inflation to maintain a strong disinflationary effect until strong indicators point to a permanent fall in inflation and the medium-term 5 percent target is reached.”

For stability, the level of prices will positively affect macroeconomic stability and financial stability through a decrease in country risk premiums, an initiation of reverse currency substitution, an upward trend in foreign exchange reserves and a permanent decline in financing costs. Although the Bank is making these statements, is it that important to say them out loud? I don’t think so. If it was, then the past statements would have an effect.

Foreign exchange accounts increased by USD 1bn and the adjusted net accounts rose by USD 806m during the week ending June 11, according to Central Bank data. The rise was completely due to legal entities. The accounts of legal entities increased by USD 907m, while the accounts of Turkish citizens decreased by USD 101m during the same week. The value of foreign exchange accounts at banks stands at USD 256.2bn as of June 11.

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