Turkey’s gross foreign exchange reserves posted a record fall in the week before Sunday’s inconclusive elections, as the central bank expanded efforts to support the lira.
(Bloomberg) — Turkey’s gross foreign exchange reserves posted a record fall in the week before Sunday’s inconclusive elections, as the central bank expanded efforts to support the lira.
The reserves dropped by $7.6 billion in the week to May 12 to $60.8 billion, central bank data showed — the biggest weekly fall in the figures going back to 2000. Net reserves as defined by the IMF, including swaps, also fell to $2.3 billion, the lowest in over two decades.
The data mark an acceleration in attempts to defend the currency, seen by citizens as a key barometer of the economy’s health and a major point of contention in the election.
Turkey’s Lira Defense Moves Into Full Swing Before Runoff (1)
The opposition, which trailed incumbent President Recep Tayyip Erdogan in the first round, has promised to strengthen reserves and adhere to free-market principles in the FX market if elected in the May 28 runoff.
Investors expect the lira to weaken whatever the outcome. Anticipating volatility, citizens and companies have put record amounts into into government-backed accounts that compensate for currency depreciation.
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