A couple of points on Turkish external balance
This is kind of another reader appreciation day, as the two points I am going to make were posed to me as questions from colleagues / readers, nearly a month ago! I would like to apologize to them for taking so long to answer, but better late than never, right?:)
I. On Turkish exports to Syria:
A reader was wondering if Turkish exports to Syria collapsed during the last few months. Since this data is available from TurkStat readily and timely, I’ll just provide the graph and let her decide for herself:
As an added bonus, here is how imports fared:
I have provided some other markets for benchmarking, but if you asked me, my answer to her question would be “not really”…
II. On “Currency and Deposits” in the Capital Account:
Here’s another reader question:
Have you looked at the BoP for June? I think the item in the KA that relates to money going into banks in the “currency and deposits” in “other investments.” Did you see how much it fell in June? It was just $395 million compared $2.49 billion. It was also very low in May. Do you have any idea what is going on with this? Seems like a big drop off. But I must admit I don’t know the BoP as well as I should.
Let’s start again with a picture:
She is right that these are rather volatile. But more interestingly, they have been mirror images of each other (negative correlation) in several months, which I find very puzzling. Anyway, to answer her question, I really do not know what is going on 100 percent, but I can at least tell her what the assets and liabilities are:
The assets are mainly banking sector foreign exchange holding at their correspondent branches abroad. As for liabilities, they are foreign exchange deposits of non-residents held by the banking sector, including the Central Bank, at least to the best of my knowledge.
Defining was the easy part. As for an explanation, some have argued, to explain the growth in assets, that there were inflows during the crisis, but this explanation was refuted by several bankers. This was a hot issue some time ago, but the Central Bank has not provided any explanation so far.
As for liabilities, the data is collected by the BIS. When discussion began on the issue, the Central Bank published a small note, explaining that some of this was originally in net errors and omissions, what I call unidentified financing objects. Interestingly enough, that note has disappeared since then. I thought I was the one not able to locate it, but several economist friends confirmed that the Bank took the note out without any explanation. Moral of the story: Always save the documents to your hard drive:)…
Anyway, this is as much as I know on the matter, which does not entirely answer the reader’s question, so any comments are more than welcome…
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