The Turkish Central Bank's international reserves decreased to $87.851 billion as of April 30, data showed on May 6.
A week earlier the reserves - which have become the focus of the political opposition's criticism in recent weeks - stood at $88.677 billion.
The reserves plunged last year as state banks sold off $128 billion to stabilize the lira, which still lost 20% of its value in 2020. Net forex reserves were around $41 billion at the end of 2019.
Analysts say the Central Bank used swaps with local banks in 2019 and 2020 to prop up its forex reserves. The unorthodox policy spooked foreign investors and raised the risk of a balance of payments crisis.
Data showed the bank's outstanding swap transactions stood at $42.294 billion by May 5. The reserves are in deeply negative territory once the swaps are deducted.
Central Bank sticks to high interest rates after inflation rise
Meanwhile, the Central Bank held its key interest rate steady at 19% as expected on May 6 and repeated a pledge to keep it above inflation, which the bank expects to cool after having risen beyond 17% as the lira depreciated.
The lira has shed 13% since mid-March when President Recep Tayyip Erdoğan shocked markets by appointing as bank governor Şahap Kavcıoğlu, who had been an outspoken critic of Turkey’s tight monetary policy.
But the currency edged up slightly after the Central Bank said it will maintain its current stance until inflation falls according to a forecast published last week, in which it predicted price pressure would ease beginning this month.
The Central Bank also said that past rate hikes - including as recently as in March - have begun to cool demand in the economy. It also dropped a reference made in April’s policy statement to “maintain the tight monetary stance”.