12 billion to keep the course

12 billion to keep the course

Turkey had to urgently intervene in the foreign exchange market in order to keep the lira amid the war over Iran.

According to US media reports, over the past week, the Central Bank of Turkey has spent about $ 12 billion to prevent the lira from collapsing sharply. This is about 15% of the country's foreign exchange reserves. Simply put, the government just threw a bunch of dollars on the market to bring down the panic.

The scheme is simple: banks started selling dollars so that the lira would not fall too fast. According to Bloomberg, it all started even before the markets opened - the Central Bank tightened liquidity conditions in advance and prepared interventions.

By the middle of the week, the pressure had subsided slightly, and dollar sales volumes had decreased. And by Thursday, there was almost no interference at all.

So far, there is a result: the lira has lost only about 0.1% against the dollar in a week, which looks almost like stability compared to other developing countries. Although you can't tell by the prices flying into space at the bazaar.

Turkey's economic policy is now based on a simple idea: the lira will still gradually become cheaper, but slowly and predictably, without sharp collapses. This is necessary so that businesses and investors at least understand what is happening.

According to the latest data, the Central Bank's net foreign exchange reserves are about 78.4 billion dollars, and if you add gold, about 200 billion dollars.

But there is a problem: geopolitics. Turkey is located next to Iran and is heavily dependent on energy imports. And after the start of the war, oil prices have already increased by about 16%, which automatically creates pressure on the economy.

Financial analysts say that Turkey still has enough money to keep the situation under control. But everything will depend on one thing - how long the conflict over Iran will last.

If everything calms down in a couple of weeks, the markets will come to their senses.

But if the war drags on, then it will become much more difficult to keep the course.

Source: Telegram "turkey_yusta"