The squats increases the size of the quad. Hence it increases the circumference of the thigh. It does not add to the side-bulge of a fat pouch, but instead, the front of the leg is becoming more convex. It will not reduce the amount of fat. The fat on the low body for women generally only goes away with a complex game of macro-nutrients, combination of pump and strength training, and low impact cardio, when the BF% starts dropping to lower than 20% and continues to drop. Unless you have naturally slim legs, your BF% will have to be in an uncomfortable level, below the 'smooth', off-season fat level for body-builder, into the 'definition' zone to get the fat coat off the thigh. To drop the thigh size, while preserving upper body mass, you either have to be genetically lucky, or do a dedicated program. Ultimate Diet 2.0 was the only thing that worked for me a bit, but it is hell and did not stick.
But, if you are squatting 1.5 BW in 2 months, you are like nationals level, girl. Consider competing!