How many buyers will come to the treasure auction and direct sales? 🤔

10 Ağu 17:25

I remember last year, the Treasury had launched a gold sale auction in dollar terms, and both individual and institutional investors were really excited about it. At the time, I did some research and bought ETFs tracking gold prices listed on BIST, considering both TL-denominated and dollar-based options. Those who chose to hold did so thinking it would stabilize the TL, but ordinary citizens debated for months whether it was a good opportunity or if prices would drop. More importantly, during that period, foreign investors were cautious because there was a 5-7% difference between the Treasury's direct selling price and the market price—on top of growing concerns about our foreign exchange reserves. When the TL came under serious pressure, I closed my options because I expected short-term volatility to increase. Ultimately, while the Treasury's moves were beneficial in terms of liquidity, market confidence weighs heavier. Investors will buy, but they carefully calculate whether the pricing is fair or if it might trigger capital flight.

10 Ağu 17:43

Treasure auctions can be likened to the share sales of offline mining companies in the past period, similar to the strategy of companies selling off their mineral reserves to generate immediate liquidity. Likewise, the Treasury opts to sell foreign currency against Turkish Lira to meet its foreign exchange needs. Investors' approach here is also very similar: when institutions with liquidity needs make "urgent sales," you may face significant discounts, or if a new factor emerges to support the price, sudden surges can occur. However, a comparison with U.S. Treasury bond auctions might be more accurate. In U.S. bonds, foreign investors typically view them as a "safe haven," allowing the Treasury to borrow at lower costs during periods of high demand. Similarly, if domestic investors' demand for foreign currency is dominant, auction participation will be intense, whereas in an environment where the Turkish Lira is not attractive to foreigners, weak demand becomes inevitable. It is also evident that domestic residents will participate in the auction with a more speculative approach compared to foreigners—since their motivation is primarily to capitalize on volatility in the exchange rate. Ultimately, considering that the auction is entered into to convert funds into Turkish Lira-denominated investment instruments, these steps hold strategic significance in achieving an equilibrium point in the exchange rate.

10 Ağu 18:04

We also encountered an auction yesterday, with similar fluctuations in the stock market. I think it could be a scenario quite close to yesterday's pricing strategy. The ministry usually holds dollar-based auctions to support foreign exchange reserves, but the market is exposed to short-term fluctuations each time. Investors generally approach these auctions with a "buy when it's cheap, sell when it's high" strategy, meaning they adopt a cautious yet opportunistic stance. Considering the recent sharp fluctuations in the Turkish lira, some participants in this auction may aim to "protect the lira from further depreciation." In direct sales, I'm sure there will again be heavy demand for foreign currency in interbank transactions, as domestic investors are also supporting these moves to strengthen their reserves. I think they might set a pricing strategy close to yesterday's levels, but the first two hours of the market's reaction, based on yesterday's experience, will still be crucial.