Turkey’s heavy reliance on swaps in terms of foreign currency reserves creates a major distrust in the economy, and the country must swiftly draw in capital, Turkish Industry and Business Association (TÜSİAD) Chairman Simone Kaslowski said during a videoconference on Sept. 24.
“The fact that a majority of our foreign currency reserves are made up of swap lines creates major distrust in the economy,” Kaslowski said.
He said that Turkey needs to “ensure full market confidence” to attract long-term financing flows. “Steps which will initiate the reentrance of capital flows into our country need to be taken as soon as possible,” he said, pointing to an accumulating debt both in the public and private sector.
“The devaluation of the Turkish lira has surpassed an annual 30 percent and there has been an accelerating decrease in our foreign reserves,” he said.
State banks buying liras and selling dollars in an apparent attempt to prop up Turkey’s currency is seen by many experts as a reason for a gradual drain on the central bank’s foreign currency reserves in recent months.