(Bloomberg) -- Foreign investors expanded their purchases of lira-denominated Turkish government bonds last week, notching the biggest monthly inflow into the country’s domestic debt on record. 

Overseas investors bought a net $1.3 billion of the debt in the week through May 17, extending inflows over the past four weeks to $5.5 billion, according to the latest central bank data. That’s the biggest four weeks of inflow on record on a rolling basis, according to Bloomberg calculations, and has brought non-residents’ holdings of domestic debt to the highest level since February 2021. 

Emboldened by pledges of monetary orthodoxy and lower inflation, foreign investors have stepped up their purchases of Turkish assets in recent weeks after the central bank carred out a larger-than-expected interest-rate hike at its March meeting. A policy pivot after elections last year, which saw President Recep Tayyip Erdogan appoint a more market-friendly team of economic officials led by former Wall Street banker Mehmet Simsek, has notably improved sentiment among foreign investors.

Bank of America strategists this week said the lira was the best bet among currencies in eastern Europe, the Middle East and Africa, recommending investors buy lira forwards as higher summer tourism revenues boost the nation’s finances. Citigroup Inc. said Turkish markets are on the verge of a “Renaissance moment” after years of near-zero foreign participation.

The amount of Turkish government debt in liras held by non-residents has more than tripled so far this year, to $8.2 billion as of the latest available data.

©2024 Bloomberg L.P.