Turkey’s current account deficit surges to $4.06 billion in November

Turkey’s current account deficit widened to $4.06 billion in November as demand for imports such as gold persisted even after the central bank hiked interest rates.

The current account gap grew from $15 million in November last year, taking the 12-month rolling deficit to $38 billion, the central bank said on its website on Monday.

The country was expected to post a shortfall of $3.7 billion in November, according to the median estimate in a Reuters poll of 11 economists last week. Forecasts ranged between $1.1 billion and $4.1 billion. It was the largest deficit since August’s $4.71 billion.

Turkey’s current account gap has widened sharply, spurred on by a government-aided borrowing boom, and put pressure on the beleaguered lira, which slumped to successive record lows last year. The lira’s losses and surging inflation has prompted the central bank to intervene and more than double its benchmark interest rate to 17 percent from 8.25 percent in September.

The lira fell by 1.6 percent to 7.49 per dollar on Monday.

The current account deficit in Turkey is largely made up of a shortfall in exports versus imports. The country’s foreign trade deficit more than doubled in November on an annual basis to over $5 billion, according to Turkish Statistical Institute data.

The November current account posted a surplus of $632 million, when excluding gold and energy, the central bank said. That compared with a surplus of $4.09 billion in the same month of 2019.

Foreign investors bought $1.28 billion of stocks and $607 million of local bonds in the month, helping to finance the deficit. Turkey’s official foreign currency reserves recorded a net outflow of $145 million, the central bank said.

The year-end current account gap may total $37.7 billion, according to the Reuters poll. The median forecast increased from $35 billion in November.