June Payments Balance Gaps and Market Dynamics: Deepening Current Deficit and Investment Flows

The Central Bank of the Republic of Turkey (CBRT) released June 2024 payments‑balance data, showing a $4.194 billion current‑account deficit and a $8.533 billion trade‑balance gap, reshaping market expectations.

Shock to the Current Deficit and Trade Balance

In June, the overall current‑account posted a $4.194 billion deficit, while the current‑account excluding gold and energy recorded a $1.462 billion surplus. Annualised, the current‑account deficit expands to $38.9 billion, marking a clear widening.

■Trade‑balance deficit: $8.533 billion

■Annualised trade‑balance gap: $76.5 billion

■Services surplus: $63.7 billion (transport $2.597 billion, travel $4.857 billion)

■Primary income deficit: $24.2 billion

■Secondary income deficit: $2.0 billion

Sectoral Inflows and Outflows

Net inflows from the services balance reached $6.851 billion in June. Portfolio investments recorded a $2.537 billion net inflow, while direct investments showed a $0.899 billion net outflow.

■Net direct‑investment outflow: $0.899 billion

■Foreign‑resident DFI increase in Turkey: $0.210 billion

■Domestic‑resident DFI increase abroad: $1.109 billion

■Net real‑estate transactions: $0.297 billion into Turkey, $0.248 billion out of Turkey

Financing Channels and Reserve Movements

The current‑account gap was largely financed by external borrowing; net loans contributed $52.9 billion, while portfolio inflows added $6.4 billion and financial derivatives $5.3 billion. Other channels exerted negative pressure.

■Net direct‑investment inflow: $0.3 billion (positive)

■Net portfolio‑investment inflow: $6.4 billion

■Net loan inflow: $52.9 billion

■Financial derivatives inflow: $5.3 billion

■Trade‑credit inflow: $0.1 billion (negative)

■Net effective‑and‑deposit impact: ‑$21.8 billion

■CBRT foreign‑reserve decline: $27.2 billion

■Official‑reserve net increase: $1.039 billion

Market Reactions and Liquidity Outlook

The data heightened FX volatility, prompting HFT algorithms to tilt short on the TL/USD pair. In the swap market, a 5‑6 bps interest‑rate‑reduction expectation emerged as investors adopt a cautious stance toward short‑term liquidity pressures.

Markets are pricing the widening current‑account deficit and the heightened need for external financing seen in June’s payments‑balance report, reflected in slightly higher FX‑swap spreads and a negative roll‑over in TL‑futures contracts. This supports short‑term monetary‑policy tightening expectations while keeping investors’ risk appetite modest. Seda Çetin, Market Pricing and Data Terminal Manager.