Turkish Central Bank (TCMB) net foreign currency reserves fell to a seven-year low of $ 7.38 billion on June 17th, according to data released on Thursday.
The exchange rate used by Reuters on Thursday to make the conversion from pounds to dollars was 17.2880. Net foreign exchange reserves were $ 8.15 billion a week earlier.
Foreign exchange reserves have plummeted in recent years, most recently due to the billions of dollars the bank sold in market interventions in the wake of the monetary crisis in December.
The pound closed the year with a 44% drop against the dollar in 2021, a drop that helped push inflation to 73.5% in May, the highest under Turkish President Recep Tayyip Erdogan.
The currency has lost about 24% of its value against the dollar so far this year.
The central bank has met the market need for more than $ 30 billion in foreign exchange since December through its reserves, in addition to direct foreign exchange intervention in 2019-2020, when it sold $ 128 billion to support the pound.
Its net foreign exchange reserves had hit a low of $ 7.55 billion earlier this year before moving higher to $ 19.13 billion on April 15.
In recent years, the bank has used exchanges with local banks to stop interventions, an unorthodox policy that has frightened foreign investors and local savers.
The data showed that the bank’s pending swap transactions amounted to 39.41 billion dollars on Wednesday. Reserves are in negative territory when exchanges are deducted.
Date – Reserves (in millions of dollars):
17-06-2022 – 7,381
10-06-2022 – 8,152
03-06-2022 – 10,517
27-05-2022 – 12,189
20-05-2022 – 9,561
13-05-2022 – 11,529
06-05-2022 – 14,995
29-04-2022 – 17,010
22-04-2022 – 17,165
15-04-2022 – 19,128
08-04-2022 – 18,303
01-04-2022 – 16,401
25-03-2022 – 15,955
18-03-2022 – 17,199
11-03-2022 – 15,861
04-03-2022 – 18,148
25-02-2022 – 18,119
18-02-2022 – 19,802
11-02-2022 – 15,817
04-02-2022 – 16,331
28-01-2022 – 10,532
21-01-2022 – 9,269
14-01-2022 – 7,547
07-01-2022 – 7,947
31-12-2021 – 8,339
24-12-2021 – 8,627
17-12-2021 – 12,162
10-12-2021 – 21,175
03-12-2021 – 22,468
25-11-2021 – 24,666
19-11-2021 – 25,181
12-11-2021 – 28,608
05-11-2021 – 31,855
29-10-2021 – 32,643
22-10-2021 – 32,420
15-10-2021 – 32,119
08-10-2021 – 29,607
01-10-2021 – 29,283
24-09-2021 – 30,429
17-09-2021 – 28,388
10-09-2021 – 28,864
03-09-2021 – 27,856
27-08-2021 – 26,449
20-08-2021 – 25,778
13-08-2021 – 24,115
06-08-2021 – 25,184
30-07-2021 – 24,619
23-07-2021 – 23,797
16-07-2021 – 24,138
09-07-2021 – 23,252
02-07-2021 – 20,430
25-12-2020 – 15,530
27-12-2019 – 41,130
28-12-2018 – 30,130
Interest rates are unchanged
The TCMB committee decided to keep the key repurchase rate unchanged at 14%. It has not changed interest rates since last year, when it implemented several interest rate cuts. In a statement, the bank said the Turkish economy was doing well in a challenging environment. He attributed this strong growth to strong external demand, which has been helped by the weak Turkish pound. The recovery in tourism has also helped the economy. On inflation, the TCMB said: “The TCMB will continue to use all available instruments resolutely as part of its pound inventory growth strategy until strong indicators indicate a steady decline in inflation and the medium-term target of 5% is reached.
At full speed for historically low pounds
The daily chart shows that the dollar / pound exchange rate continued to rise after the last decision on interest rates. The pair has also moved above the 25-day and 50-day moving averages, while the Relative Strength Index (RSI) has risen above the supermarket level.
Therefore, as invezz.com writes, the pair will probably continue to grow as investors aim for the all-time high of 18.33. The situation will only change if TCMB signals that it will raise interest rates.
Petros Kranias
Source: Capital
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