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 used by Reuters 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.
Data showed the bank’s outstanding swap transactions stood at $48.73 billion as of Wednesday. The reserves are in negative territory once the swaps are deducted.
Note: The figures are released every week on the central bank balance sheet as per a letter of intent with the International Monetary Fund dated 18 January 2002. The figures are released in Turkish liras and are converted by Reuters to U.S. dollars using the central bank’s official exchange rate from the previous work day.
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