The Central Bank’s reserves will exceed USD 115bn after the pending transactions are completed, according to President and Chairman of AK Party Recep Tayyip Erdogan. Speaking at the extended provincial heads meeting of AK Party, he said the bank’s current reserves stand at USD 109bn. “In 2019 we managed to shift the current account deficit, which for years was our economy’s biggest problem, into a surplus. We will see the same table again soon.” The current account deficit stood at USD 1.1bn in June, Erdogan said. He also added that after a fall especially due to fluctuations in foreign exchange rates, the country’s gross domestic product (GDP) will surpass over a trillion dollars.
What Erdogan did not mention was the source of this USD 6bn increase in the reserves. The IMF Executive Board, convened on June 26, approved the proposal to transfer a total of $650 billion in IMF money (SDR) to member countries. After the final approval, which is expected to come in August, approximately USD 6.4bn will be transferred to Turkey in line with the country quota. The amount will be added to the gross reserves of the Central Bank (CBRT). The CBRT’s net reserve excluding liabilities will continue to be negative.
Looking at the money market, USD/TRY, which closed the day below 8.40 yesterday, hovers around 8.37-8.39 this morning. EUR/TRY is traded at 9.84.
Gold started to depreciate at the international markets, after the risk appetite calmed down following the recovery in USD and seeking safe harbor. The yellow metal, which saw below USD 1,800, fell to USD 1,795 this morning. Brent crude, meanwhile, is traded at USD 71.00 per barrel.
DAILY AGENDA
The seasonally adjusted confidence index increased by 1.2% in the services sector, 0.6% in the retail trade sector and 7.1% in the construction sector in August, compared to the previous month, according to the Turkish Statistical Institute (TurkStat).
The Real Sector Confidence Index dropped by 0.9 points to 113.9 in August, compared to the previous month, according to the Central Bank.
The Capacity Utilization Rate of the Manufacturing Industry (CUR) rose by 0.4 points to 77.1 in August, compared to the previous month, according to the Central Bank.
