Fiscal Deficit Narrows
The February treasury data shows a significantly smaller cash deficit, a strong sign that fiscal discipline is taking hold. This improvement, with the deficit shrinking to -94.42B from a much larger figure, suggests government spending and revenue measures are becoming effective. We should view this as a positive catalyst for Turkish assets in the near term. This fiscal tightening reduces pressure on the central bank and the Turkish Lira. As we saw through much of 2025 when the government struggled with larger deficits, a weak fiscal position often undermines the currency. Therefore, we should consider strategies that benefit from Lira strength, such as selling out-of-the-money call options on USD/TRY, anticipating the pair will face downward pressure. This positive data point aligns with the broader trend of improving risk perception for Turkey. Recent statistics show the country’s 5-year CDS, a key measure of default risk, has fallen below 290 basis points, a level not seen since early 2021. This indicates that the market is already rewarding the orthodox policy shift we’ve been observing since last year.Equity And Rates Implications
For equity derivatives, the improved fiscal outlook is bullish for the BIST 100 index. Reduced government borrowing needs can lower bond yields and free up capital for the private sector, boosting corporate earnings and investor confidence. We should look at buying BIST 100 futures or call spreads to position for a potential rally in the coming weeks. Create your live VT Markets account and start trading now.
Start trading now – Click here to create your real VT Markets account
