Turkey’s tumbling foreign assets hint at ‘aggressive’ lira intervention

Source:Financial Times Date:23Dec2021

Erdogan’s new-new economic model, too, is not working. CB hopes people converting FX to TL will replenish its rapidly declining reserves. Such reserve burn could cause problems with external loan refinancing..

The Turkish central bank has not announced any official interventions this week and declined to comment on whether it had sold dollars to prop up the lira in recent days. But the erosion of its foreign assets suggests that this has played a significant role in the lira’s recovery. Ugur Gurses, a former central bank official, said the 50 per cent rally in the currency from Monday’s nadir was explained at least in part by a large “backdoor intervention”. A London-based analyst, who asked not to be named, said he had calculated an intervention of $6.9bn on the same days — estimates range from $5.5bn to $7bn. Turkish bankers reported a “very concerted and aggressive effort to make Erdogan’s announcement look good”, he said.