Turkish cenbank's net FX reserves plunge to lowest since 2002

2 minute read

A logo of Turkey's Central Bank is pictured at the entrance of its headquarters in Ankara, Turkey October 15, 2021. REUTERS/Cagla Gurdogan

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ISTANBUL, Dec 30 (Reuters) - The Turkish central bank's net international reserves plunged to their lowest level since 2002 at $8.63 billion on December 24, from $12.16 billion a week earlier, according to data on Thursday that reflected recent market interventions.

The exchange rate used by Reuters on Thursday was 11.4508.

The central bank has announced five direct market interventions this month to stem a currency crash, which bankers say totaled between $6-$10 billion. 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.

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The latest draw-down puts net holdings below levels reached in April when they dipped below $10 billion.

They then rose through most of the year before coming under pressure again after the bank's December interventions meant to address "unhealthy" prices after a weeks-long lira crash.

In 2019-2020, the net reserves plunged as the central bank sold off $128 billion via state banks to stabilize the lira, which has still steadily depreciated. Such sales emerged as a focus of what the political opposition calls government mismanagement, and some analysts say they have begun again this month though the government denies this.

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 $49.770 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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Reporting by Ezgi Erkoyun and Ece Toksabay Editing by

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