Foreign fund inflows may start before elections: Banker

ISTANBUL

Foreign fund inflows to Türkiye are likely to gather momentum not after but before the local elections, says Hakan Aran, the general manager of İşbank, one of Türkiye’s largest private banks.

The consensus is that foreign investors’ interest in Türkiye usually increases before elections, he said.

“However, this time round, I expect foreigners who are waiting to enter the Turkish market to act before the elections.”

The local election will be held at the end of March next year.

With the rationalization of interest rates in Türkiye and foreigners being able to predict the exchange rate, it will become clearer when they will enter the market and which instruments they will invest in, Aran explained.

“I predict that capital flows to Türkiye will strengthen, and we will be able to provide foreign currency loans at an affordable cost, and the CDS risk premium will fall below 300.”

“Under the conditions when the CDS risk premium is low, foreigners’ interest [in Türkiye] is high, and we can find foreign currency loans, we can easily provide loans in dollars and euros to businesses and the tourism industry,” he said, adding that this will also give a boost to competition among banks.

Aran does not expect “abnormal” increases in foreign currency rates and said that rates will probably rise in line with the inflation rate.

“What causes problems to businesses is the difference between inflation and currency rates. The increase in their costs is above inflation, but their revenues are in foreign currencies.”

If currency rates increase as much as inflation, this will provide predictability and making decisions about investment will become easier, he said.