(Changes sourcing, adds analyst comment)
By Nevzat Devranoglu
ANKARA, May 2 (Reuters) - Turkey’s central bank will set up a lira-for-gold swap transaction market starting May 6 to help boost its sagging foreign reserves, bankers told Reuters on Thursday.
The central bank ramped up its use of swaps in March to fend off a volatile selloff in the Turkish lira, sparking concerns among investors that it was using the transactions to build up its forex reserves.
The central bank would receive gold and provide banks with lira for the transaction, said the bankers, who received a letter from the central bank outlining the plan.
The total unmatured swap purchase amount will be 100 tonnes and the transactions will have a maturity of one week, the lenders told Reuters.
The central bank did not immediately respond to a request to comment.
While the bank targets inflation, a selloff in the lira that began in late March has emerged as a key concern after a full-blown currency crisis last year tipped the Turkish economy into recession.
Even though the central bank has “good intentions”, the market is suspicious because of previous concerns regarding the central bank’s use of unorthodox methods, said Piotr Matys, emerging markets FX strategist at Rabobank.
“The central bank is in a really difficult position and the fact that governor Cetinkaya hasn’t fully explained in a sufficient way the FX reserves and then the breakdown for those reserves definitely didn’t help,” he said.
Central bank governor Murat Cetinkaya said on Tuesday that the bank does not design tools by looking at their impact on reserves, and that the increase in swap transactions was carried out to support the market in the face of a market anomaly.
Analysts were not satisfied by Cetinkaya’s comments, saying he did not provide clarification on the bank’s reserves and how they are calculated. (Reporting by Nevzat Devranoglu; additional reporting by Ali Kucukgocmen Writing by Ezgi Erkoyun; Editing by Jonathan Spicer)