Turkey currency interventions this year may total $66 billion – economist

Turkey’s central bank may have intervened in the currency markets to support the lira this year with as much as $66 billion, according to calculations by a Bloomberg economist.

The calculations are for the year to July 22 and total about $10 billion a month, Bloomberg economist Selva Baziki said on Twitter. Baziki is a former director of macro financial analysis at Turkey’s central bank and also worked at the Boston Fed.

Turkey’s central bank has been selling foreign currency this year in an effort to arrest a slide in the lira's value. Still, the lira has declined by more than a quarter after dropping by 44 percent in 2021.

The central bank spent an estimated $128 billion in foreign currency reserves through interventions in the market and by engaging in foreign currency swaps with state-run banks in 2019 and 2020, leaving its net reserves deeply in negative territory. The political opposition have used the figure to criticise the government’s management of the economy. Turkish President Recep Tayyip Erdoğan has sacked three central bank governors since the summer of 2019.

Baziki said Bloomberg made the calculations by taking the difference between net inflows (rediscount credits + export revenues + FX-protected deposits - sales to SOEs - gold revaluation) and the actual change in net reserves excluding swaps.

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