Turkey’s current account deficit declined by 24% y/y to $3.76mn in June, central bank data showed on August 11.

Analysts were expecting a shortfall of $4.4bn for the month.

The foreign trade deficit fell by 13% y/y to $4.57bn as exports rose 3% y/y to $13.88bn and imports declined by 2% y/y to $18.45bn.

On the financing side, net tourism revenues jumped 30% y/y to stand at $1.39bn but the central bank reported a foreign direct investment outflow of $515mn in June. Portfolio inflows into the country increased by a sharp 333% y/y to $4.2bn in the month. There was an inflow of $693mn into Turkish equities while the domestic government debt securities market saw an inflow of $1.22bn.

The government and local banks borrowed $1.21bn and $1.42bn, respectively, from international capital markets through bond issues in June, the central bank said.

Data also showed inflows of $987mn through net errors and omissions in June, down from the previous month’s $1.55bn. Unregistered capital outflows amounted to $4.47bn across January-June versus inflows of $1.85bn in the same period of last year.

The central bank’s official reserves increased to $2.97bn in June from $2.45bn in May, but they declined by 19% y/y.

“The central bank has been buying FX in size in the past two months, building FX reserves and capping appreciation. So the CBRT [central bank] is managing the lira around the 3.5 level,” Tim Ash, economist and senior EM sovereign strategist at BlueBay Asset Management, commented.

The lira was trading at 3.5449 per dollar as of 10:30am local time on August 11.

Turkey’s current account deficit rose to $20.77bn in January-June from $19bn in the same period last year. The country’s foreign trade deficit increased to $22.45bn in the first six months of the year from $20.3bn a year earlier.

The 12-month cumulative current account deficit declined to $34.3bn in June, from $35.5bn in May.

The government’s forecast for 2017 is $32bn, or 4.2% of GDP.