Turkish state-owned energy company BOTAS is expected to turn to the central bank to meet its growing needs for hard currency and to support the pound as gas prices and demand rise during peak consumption in the winter months, they say. sources on reuters.
Turkish officials say the government intends to allow BOTAS to use the central bank’s foreign exchange reserves to limit any further devaluation of the Turkish currency, which is at an all-time low of 10.5 against the dollar.
BOTAS hard currency needs are expected to remain high until March, a source told Reuters. BOTAS buys liquefied natural gas in the spot market, where prices have risen.
Instead of securing dollars in the open market – where the pound has fallen 29% this year – BOTAS could turn to the central bank.
Official figures show a jump in foreign currency sales last month.
The increase in purchases by BOTAS could limit the recovery of the bank’s foreign exchange reserves, which remain depleted after using about $ 128 billion in 2019 and 2020 to support the pound in unorthodox market interventions.
“Demand from BOTAS will be much higher than previously estimated, and such sudden demand could upset the already fragile balances,” a Reuters source said.
He added that the central bank will meet the demand during the period.
The second source said that the government aims to limit any damage to foreign exchange in November-March, as spot orders for gas would have a major impact.
The central bank’s foreign exchange reserves stand at $ 125 billion, the highest level since 2015.
Net reserves amounted to $ 32 billion, after falling below $ 10 billion in April, while cash is clearly negative once exchanges with local banks are excluded.
Analysts say the early cuts in interest rates by the central bank hit the pound, adding that limited reserves and high foreign currency liabilities pose a risk of default in the private sector and deeper balance of payments problems.
According to official figures, central bank hard currency sales to BOTAS rose to $ 258 million last month.
In June alone, it sold $ 269 million to the energy company.
.
Source From: Capital
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
