Foreign Bond Buying Hits Six‑Month High as Dollar Deposits Surge

Turkey’s financial markets once again positioned themselves at the center of global investment flows, as foreign bond purchases reached a six‑month high and foreign‑currency deposits rose by 12%.

Foreign Bond Buying Hits a Record

■The Central Bank of the Republic of Turkey (TCMB) reported $3.2 billion in foreign bond inflows, the highest in six months.

■Investors are diversifying portfolios, shifting from TRY to USD and EUR bonds.

■This movement is driven by clarity in Turkey’s interest rate expectations.

Foreign‑Currency Deposits Surge

■Deposits in foreign currencies rose 8% to $4.5 billion in the first quarter of 2026.

■The uptick in USD and EUR deposits reflects a rebound in confidence from overseas investors.

■The rise serves as a hedge against exchange‑rate volatility.

Banking Sector Deposit Dynamics

■Total deposits reached $42.3 billion, a 4% increase from the previous quarter.

■Short‑term external debt stock rose 5%.

■Tightening of SME credit has altered banks’ risk profiles.

Global Market Developments

■U.S. housing starts are recovering while the Fed is winding down rate‑hike positions.

■In Germany, Unicredit and Commerzbank remain in merger talks.

■The cease‑fire process in Gaza and Israeli violations add regional risk.

Markets view this as a positive signal that foreign investor confidence has been restored and the Turkish Lira has gained short‑term stability. Yet the contraction in SME credit and the rise in short‑term debt highlight risks that must be monitored for long‑term financial stability.