- Despite the negative current account balance in the past two quarters, the domestic foreign exchange (FX) liquidity condition seems to be improving in 2023 due to the dwindling demand for FX loans across multiple sectors of the economy.
- The growth in the domestic FX liquidity supply seems to be driven by the State-Owned Enterprises (SOE) sector, as the more regular reimbursement schedule provides a better mechanism to transfer FX liquidity from the public sector to SOEs.
- Domestic banks may benefit from the SVBI’s success in the short term, given the anaemic demand for FX loans from both SOEs and the private sector.
