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.
Turkish Treasury and Finance Minister Berat Albayrak has said that Turkey is waging a struggle for political and economic independence, as he commented on the economic situation of the country amid the coronavirus (COVID-19) pandemic. According to the minister, Turkey is one of the countries that were the least affected by the pandemic in terms of employment and growth.
The swap deal limit between the central banks of Turkey and Qatar has been amended to $15 billion equivalent of Turkish lira and Qatari riyal. According to a statement from the Turkish Central Bank on May 20, the move aims to facilitate bilateral trade in respective local currencies and to support financial stability of the two countries.
Zeitgeist Turkey | Episode 7: As Turkish lira weakens to beyond 7 against dollar Erdoğan faces a choice
Duvar English’s editor-in-chief Cansu Çamlıbel and pollster Can Selçuki are joined by political economist Esen Çağlar to discuss the underlying factors behind the accelerating loss of value of the Turkish lira against the dollar. They look for answers to how the Turkish government is caught between a rock and a hard place by rapidly selling the Central Bank reserves. They also discuss whether Ankara can secure a swap line from the U.S. without giving up Russian S-400s.
Former advisor for Turkish Treasury: Excluding swap lines, central bank reserves $13.4 billion in the red
Excluding swap lines, Turkey's Central Bank's net reserves stood at $13.4 billion in the negative as of the end of April, according to economist and former Treasury Advisor Mahfi Eğilmez. The primary reason behind the foreign currency reserves falling by $28.5 is the sale of the Central Bank reserves, he argued. Eğilmez also said that there has been a decrease of $1.5 billion in foreign currency bank accounts in the past week.
Turkey was caught with the coronavirus outbreak at a time when it was weak structurally. Just like in the COVID-19 epidemic, the underlying disease story is the story of those problems in economy which were “swept under the carpet” for a long time. Turkish government's economy policies after 2018 were based on bans, limitations and covering up of the symptoms rather than resorting to necessary steps to solve the problems.
Turkey's Banking Regulation and Supervision Agency (BDDK) ruled that Turkish banks are allowed to swap only 10 percent of their legal capital. In August 2018, The BDDK had already lowered the limit of swaps, futures, forwards and options with a foreign currency and a Turkish Lira leg to 25 percent of the banks’ legal capital.