Turkey's net international investment deficit grew by $20 billion from the end of 2019 to reach a total $365.8 billion at the end of August. Turkey's international assets shrunk by 10.2 percent to reach $227.4 billion in the same period.
Turkey's Central Bank's net international reserves shrunk to $16.8 billion by Oct. 2, the bank reported on Oct. 8. Turkey's net international reserves totaled $40.9 billion in January, but had more than halved by Sept. 25, measuring a mere $16.9 billion. The Turkish Lira also hit a new low of 7.9389 against the dollar.
Our economy administration wasted billions of cash foreign currency of the Central Bank and public banks just to maintain a self-styled economy policy and to keep the foreign exchange rate at a certain level. It is a pity that now, this economy management, with its collapsed economy policy, is resorting to the monetary tightening of the Central Bank.
Turkey's Central Bank unexpectedly hiked interest rates on Sept. 24, triggering an improvement in the lira's value against the dollar. The Turkish Lira has sunk to record lows over the past month as Ankara's currency interventions proved futile.
The Turkish Lira observed a new low against the dollar on Sept. 23, trading for 7.684 liras against the greenback by 10 a.m. The lira observed a record low yesterday as well, dipping to 7.682 liras. Meanwhile, Turkish economist Uğur Gürses noted that the decline in exchange rates was triggered by a distrust for the economy.
Ali Rıza Güngen writes: In Turkey, a portion of the risk stemming from foreign currency loans has been transferred to the public. In other words, not the individual debts but the risk has been spread to society.
The Turkish Lira hovered near its historical low against the dollar on Aug. 31 as the Turkish statistical authority revealed a contraction of 9.9 percent in the economy. The currency has lost about 19% against the greenback this year.
Turkey is poised to produce a record amount of gold this year and the Central Bank will probably buy all of it at prices near record highs, Bloomberg reported on Aug. 24. The value of its gold reserves surged to an all-time high in the week through Aug. 7, only to drop 5 percent a week later, the biggest decline in five months. That effectively mirrored the moves in market prices over the same period.
The Turkish Central Bank on Aug. 20 kept its one-week repo rate – also known as the policy rate – constant at 8.25 percent, holding it unchanged for the third straight month. "The gradual normalization of pandemic-specific financial measures and recent tightening steps taken in liquidity management are judged to support macrofinancial stability," said the bank statement.
Turkey's Central Bank on Aug. 19 cut the overnight limit for interbank money loans in half in an attempt to improve liquidity. The Turkish Lira has tumbled to record lows against the dollar over the last month, proving Ankara's currency interventions futile.
Turkish Treasury is “printing” forex bonds to create additional foreign currency for its own operations. Public banks, on the other hand, are spending their cash foreign currencies and replacing them with forex bonds the Treasury is printing.
For a long time, Ankara had eroded foreign currency reserves worth near 100 billion to hold the rate. Now, it has come to the end of the road. It has spent its last penny and left the rate to the markets. Thus, the “unheard of” invented exchange rate regime has collapsed.
Turkish public banks have started charging clients for foreign currency withdrawals in accordance with the Central Bank's August 4 decree that aims to push down the amount of foreign cash circulating in Turkey. The 0.2 to 0.5 percent commissions for withdrawals are part of Ankara's efforts to lower the Turkish Lira's exchange rate against the dollar and the euro, which peaked to record highs earlier this month.
The World Bank issued its latest edition of the Turkey Economic Monitor (TEM) on Aug. 12, in which it pointed to the sharp drop in Turkey's Central Bank reserves. "Though short-term external debt obligations seem manageable, a growing current account deficit and the sharp decline in reserves have heightened external vulnerabilities," it said.
Can the forex loss in Turkey be recovered without sending the bill to the public? If first signs of the establishment of political normalization, democratization and rule of law emerge in a powerful way in Turkey, then the “shrunken” foreign currencies will come back to the system.