By Nevzat Devranoglu
ANKARA (Reuters) – The Turkish central bank’s net international reserves rose by more than $6 billion last week to about $24 billion, four bankers said on Tuesday, resuming an uptrend since the government adopted a more orthodox monetary policy following May elections.
The rebuilding of the central bank’s currency buffer is seen as a gauge of authorities’ willingness to ease controls on the lira, which has tumbled 28% since President Tayyip Erdogan was re-elected.
The bank’s reserves slumped to minus $5.7 billion in early June, their lowest since data publication began in 2002, as authorities sought to counter foreign exchange demand and stabilise the lira over the election period.
But reserves have recovered strongly since, increasing $30 billion in around four months.
Net international reserves saw their largest weekly rise in July by $8.5 billion.
Gross reserves rose by about $4 billion as of Sept. 22 to around $125.5 billion, according to the bankers’ calculations based on central bank indicators.
Under an unorthodox policy advocated by Erdogan, the central bank slashed its benchmark interest rate to 8.5% in February from 19% in 2021 despite high inflation, triggering a lira crisis.
But under new Governor Hafize Gaye Erkan, it has hiked the rate by 2,150 basis points in the last four months.
Under measures introduced last year, the central bank boosted reserves by buying 40% of exporters’ forex income, amounting to around $100 billion annually. This and more was then sold by the bank to support the lira in a practice halted since the elections.
Earlier this month, Finance Minister Mehmet Simsek said that Ankara had allowed the exchange rate “to be free”.
The central bank continues to get foreign exchange from tourism and a scheme to protect lira bank deposits from depreciation known as KKM.
(Reporting by Nevzat Devranoglu; Writing by Tuvan Gumrukcu; Editing by Kim Coghill)