The net foreign reserves of Türkiye's central bank are estimated to have surged by a record $7 billion last week, according to bankers, sustaining a strong turnaround in its financial buffer as the monetary authority steps up efforts to amass foreign currency.
The Central Bank of the Republic of Türkiye's (CBRT) net reserves rose to $21 billion from $14 billion a week earlier, according to four bankers' calculations based on preliminary data, cited by Reuters. The strong rise was muted by a $3 billion decrease in the volume of swaps.
Excluding swaps, net reserves leaped a record $10 billion, marking a fifth straight week of rises since March 31 local elections and reflecting increased foreign interest. Total reserves rose some $3 billion to $127 billion in that period.
The central bank bought nearly $11 billion in foreign exchange last week, including $4 billion on Tuesday alone, also marking a record high level, the bankers said.
Bankers have noted a significant improvement in the quality of foreign exchange reserves at the CBRT, which they say has not been seen at this level and pace since 2020.
The bank has been accumulating foreign currency without disrupting liquidity conditions in the Turkish lira. Bankers suggest that the CBRT has been focusing on increasing the quality of reserves and the amount of foreign currency it holds since last month.
The central bank did not immediately respond to a request for comment on the figures, which it usually publishes on Thursdays with a week lag.
Major improvement in 5 weeks
Up until the election, net reserves had fallen nearly $25 billion this year. They began to turn around after the central bank's surprise 500 basis-point interest rate hike in March.
The bank's net reserves, excluding swaps, hit a record low of minus $65.5 billion on March 29, just before the local elections. They recovered to minus $39 billion last week, the bankers' calculations show, marking an improvement of $27 billion within five weeks.
Bankers highlight a recent acceleration in foreign interest and say if this process is sustained, authorities may focus later this year on easing restrictions on London swap limits.
They note that foreign interest has become particularly evident in the swap market, with increasing interest also observed in the lira-denominated bond market.
The central bank regularly increases its foreign exchange reserves through various regulations, notably taking 40% of exporters' income, which contributes some $100 billion to reserves annually.
Supported by the increasing foreign interest in the dollar/lira swap and bond markets, the exchange rate fell below 32.5 levels and has begun to stabilize at these levels.
The lira traded at 32.2681 against the dollar at around 1:10 p.m. local time in Istanbul
After experiencing its most significant depreciation against the greenback since July with a 3.5% decline in March, the lira concluded April with a modest 0.04% gain. It had depreciated by 9% in the first quarter.