The Central Bank (CBRT), which transferred TL 40.5 billion in total as a dividend and reserve fund to the Treasury in January, has been supporting the Treasury by purchasing government bonds (government domestic debt securities) of 1.9 billion TL from the secondary market since the beginning of the year. It offered. This figure is equivalent to one third of total bond purchases in 2018.
Noting that the share of foreign bonds in government bonds, which was 22.8 percent on 9 February 2018, was at a record low rate of 11.3 percent as of January 17, 2020, and that the foreign exchange outflow of $ 3.3 billion was recorded in the bond market in the past year, Bloomberg added that CBRT’s 1.9 billion TL emphasized that the biggest bond repurchase signed by Turkey was filled by the CBRT by the escape of foreigners.
With the contribution of the center’s bond purchases, 2-year benchmark bond interest rates fell by approximately 200 basis points and quadrupled the average drop rate in peer countries’ bond rates.
16 BILLION TL SUPPORT FOR TREASURY
Having determined the amount of government bonds purchased for the secondary market for 2018 as 18.9 billion TL, the CBRT set this figure as the maximum 5 percent of the analytical balance sheet size for 2020. 5 percent of the balance sheet size currently corresponds to TL 33.3 billion. In this case, the bank, which holds 18.7 billion TL in government bonds as of the beginning of December, will be able to make a total purchase of at least 16.6 billion TL this year.
Speaking to Bloomberg, QNB Finansbank chief economist Erkin Işık stated that the CBRT’s bond purchases would have an effect similar to monetary easing. Işık pointed out that the Center has opened a space for banks to increase credit volume through bond purchases.
Noting that the CBRT raised concerns about the risk of loosening its stance in five meetings by decreasing interest rates by 12.75 points and increasing real inflation below zero, Bloomberg said that Lutz Roehmeyer, the investment chief of Berlin-based asset management company Capitulum, is not sustainable. economic and political big doubts about foreigners in Turkey continues. There is also fear that the US might impede the purchase of bonds and the convertibility of TL ”.
The Treasury will be supported this year with the purchase of bonds of approximately 16 billion TL, following the transfer of profit transfer, transfer of the reserve fund, and the increase in the valuation account due to the exchange rate difference.
