Turkish business' FX deficit soars to highest since 2019, nears $150B

The net foreign exchange (FX) deficit of the Turkish real sector rose sharply in January 2025, reaching $147.99 billion—its highest level since November 2019, the Central Bank of the Republic of Türkiye (CBRT) reported.

A net FX deficit indicates that companies owe more in foreign currencies than they hold, increasing their exposure to currency fluctuations.

The $10.98 billion month-on-month increase was driven by a fall in foreign currency assets—such as export receivables, bank deposits, and overseas investments—and a notable rise in liabilities, including domestic and international loans.

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Lower deposits and receivables

Compared to December 2024:

• FX assets of non-financial firms decreased by $2.7 billion
• Deposits held in domestic banks dropped by $2.02 billion
• Derivative assets (financial instruments tied to exchange rate movements) fell by $1.08 billion
• Export receivables declined by $534 million.
• In contrast, foreign direct investments and overseas securities rose by $859 million and $75 million, respectively

Despite those gains, overall assets still fell significantly during the month.

Surge in long-term foreign loans

FX liabilities increased by $8.28 billion in January. This included:

• $3.89 billion rise in domestic loans
• $2.54 billion in derivative liabilities
• $2.15 billion in loans from foreign lenders
• Outstanding import-related debts fell by $304 million

Breaking down liabilities by maturity:

• Short-term domestic loans increased by $1.25 billion
• Long-term domestic loans rose by $2.65 billion
• Short-term foreign loans dropped by $130 million
• Long-term foreign borrowing surged by $1.98 billion, reflecting a shift toward extended repayment horizons

Shrinking FX cushion in the short-term

As of January, Turkish companies held $131.59 billion in short-term FX assets (liquid holdings expected to be used within a year) versus $119.47 billion in short-term liabilities. This left a short-term FX surplus of $12.12 billion—down $7.17 billion from the previous month—indicating a weakening buffer to meet near-term foreign currency obligations.

Short-term liabilities accounted for 38% of total liabilities, indicating a potential vulnerability in terms of rollover and exchange rate exposure.