Turkish central bank forex reserves drop below $8b

Turkish central bank forex reserves drop below $8b

Monitoring Desk

ISTANBUL: The Turkish central bank’s net international reserves dropped to their lowest level since 2002, down to $7.95 billion on Jan. 7 from $8.34 billion a week earlier, according to data on Thursday that reflected recent market interventions.
The exchange rate on Thursday was 13.6352. Data from the central bank show that it sold a total of $7.28 billion in December to stem a currency crash. There were no intervention notices since Dec. 17, though bankers have said the drop-off in reserves point to more state support for the lira.
Net international reserves fell below $10 billion in April. They then rose through most of last year before coming under pressure again after the bank’s December interventions meant to address “unhealthy” prices after a weeks-long lira crash. The lira still ended the year down 44% against the dollar, a slump which sent inflation soaring to 36%, the highest under President Tayyip Erdogan’s rule. In 2019-2020, the net reserves plunged as the central bank sold off $128 billion via state banks to stabilize the lira, which still steadily depreciated. Such sales emerged as a focus of what Turkey’s opposition calls government mismanagement. The government says there have been no sales for at least three weeks. In 2019-2020, the central bank used swaps with local banks to backstop the FX interventions, an unorthodox policy that spooked foreign investors and local savers.