Interest in Turkish assets and a call to invest in lira-denominated bonds Economy

The Turkish Central Bank called on foreigners to invest in government bonds denominated in the lira, amid increasing investor interest in Turkish assets.

Official data reported by the Daily Sabah newspaper showed that foreign investors showed more interest in Turkish assets, and revealed that foreign investors carried out acquisitions worth 42.13 billion liras ($1.45 billion) during the week ending December 8, which is the largest inflow since July 2017.

This recovery in investment follows a series of large interest rate increases that have restored attractiveness to the market in recent months.

The central bank has raised interest rates by 3,150 basis points since June, to 40%.

According to Daily Sabah, data from the Turkish Central Bank last Thursday showed that foreign investors pumped a net amount of $891.4 million into Turkish local government bonds during the week ending December 8, which is the highest weekly flow level since August 2017. .

The newspaper also indicated that foreign investor flows into the Turkish stock market amounted to $562.4 million, which is the largest weekly amount since November 2020.

Meanwhile, Hafiza Ghaya Arkan, Governor of the Turkish Central Bank, said that the monetary tightening cycle in Turkey is nearing its end, calling on foreign investors to invest in government bonds denominated in the Turkish lira with a currently favorable return.

Arkan added in an interview with the local Hurriyet daily newspaper on Saturday that the tight monetary policy has begun to affect consumer prices, but single-digit inflation will not be achieved before 2026.

Amid improving data, data from Standard & Poor’s showed that the cost of insuring Turkey’s debts against default fell to its lowest level in nearly 3 years on Thursday.

Turkey’s new economic administration turned to more traditional policymaking after President Recep Tayyip Erdogan won a new term in May, adopting strong monetary tightening to limit strong domestic demand and stem inflation.

Official data showed that the annual consumer price inflation rate in Turkey rose to 61.98% last November, driven by a rise in food and transportation prices.

The government also sought to rebuild foreign exchange reserves and boost investments and exports to improve the current account balance.

The total reserve of the Turkish Central Bank rose by $1.225 million in the week ending December 8, reaching $141.3 billion, the highest level ever.

According to Turkish Central Bank data published Thursday, the bank’s total foreign exchange reserves increased in the aforementioned period by $1.276 billion to reach $94.5 billion, while the total gold reserves decreased by $52 million to exceed $46.8 billion.