Türkiye's economy chief on Monday said the central bank’s foreign exchange reserves had shown an improvement "at a scale and speed unprecedented in history" since local elections at the end of March, attributing its momentum to investors' interest in the country and lira assets.

Treasury and Finance Minister Mehmet Şimşek also said Türkiye is working on a regulation for a minimum corporate tax as part of efforts to establish a fairer tax system.

Excluding swaps, the net international reserves of the Central Bank of the Republic of Türkiye (CBRT) have improved by about $49 billion (TL 1.58 trillion) since the local polls on March 31, Şimşek told an interview with public broadcaster TRT Haber.

He attributed the improvement he said was "at a scale and speed unprecedented in history" to a "significant" increase in fund inflows and a portfolio shift in favor of the Turkish lira.

"We are talking about a period of 1.5 months. As uncertainties decrease and the effectiveness of the (medium-term economic) program becomes evident, demand for Türkiye increases," Şimşek said.

Following last year's presidential and parliamentary elections, Türkiye moved away from years of loose monetary policy. The CBRT embarked on an aggressive rate hike cycle, raising its benchmark policy rate by 4,150 basis points to 50% since last June.

The government has been endorsing an economic program centered around taming inflation, rebuilding foreign exchange reserves and curbing current account and budget deficits.

The minister said the lira would have appreciated "enormously in nominal terms" if the central bank had not been accumulating foreign currency to shore up its reserves.

He stressed that steep currency gains would bring risks amid increased foreign demand for lira assets.

"We do not foresee excessive appreciation of the lira. All sorts of excess are dangerous," Şimşek said.

He reiterated that they do not have a specific exchange rate target for the lira but warned against any extreme fluctuations.

The lira was little changed as of 4:25 p.m. in Istanbul, trading at 32.2 per U.S. dollar.

Şimşek said the currency could have strengthened to below 30 without central bank action.

The lira has been relatively stable this year after weakening almost 40% against the dollar last year. Last week, it registered its longest winning streak since 2021.

"We have been accumulating reserves; we need to strengthen our reserve position. Currently, Türkiye is experiencing a significant inflow of funds. Türkiye's current account deficit is decreasing, the Turkish lira is very attractive, and there is no significant reason for the depreciation of the lira. This supports lowering inflation," Şimşek said.

Şimşek mentioned that Turkish residents have sold $12 billion and converted it into lira since the beginning of April.

Among others, the minister also said that the government would evaluate taking steps regarding the easing of offshore currency swap regulations.

The Banking Regulation and Supervision Agency (BDDK) first implemented swap limitations in August 2018, following a steep volatility in the lira.

The restrictions limited banks' foreign exchange swaps with overseas residents to a percentage of their legal equity.

The government has been "cautious" on this issue so far, said Şimşek. But indicating that economic developments are increasingly "solidifying," he said they could make a decision in this direction in the upcoming period.

Such steps would initially be "one way" and focus on six-month or longer maturity restrictions, the minister noted.

Şimşek went on to refer to the gradual decline in Türkiye's risk premium, which has dipped to the lowest level in four years.

The country's five-year credit default swaps (CDS) – a form of insurance for bondholders – has dropped from the peak of around 700 basis points last May to below 270.

"We have shown a tremendous performance compared to other developing countries during this period. That is, not only has our risk premium decreased, but it has decreased much faster compared to other countries similar to us," said Şimşek.

"The decline in the risk premium is actually a key indicator summarizing the program's effectiveness because it is one of the factors determining the cost of fund inflows to Türkiye. There is a much larger increase in fund inflows to Türkiye than we anticipated."

On broader economic policies, Şimşek underscored efforts to ensure fairness in taxation and mentioned ongoing work toward implementing a minimum corporate tax.