The central bank is eating from ammunition

The rapid movement of the dollar towards 37 liras as of last week caused the Central Bank (TCMB) to start selling reserves again. TCMB's total reserves broke a record with 173.2 billion dollars on February 14, but since that date, the sale of dollars to the market has started again. According to economists' calculations from TCMB balance sheet data, there has been a loss of 13 billion dollars in reserves since February 14, with 10 billion dollars last week and 3 billion dollars in the last two days.

THE OLD CBRT IS BACK

The Central Bank, which has been selling billions of dollars of foreign exchange to control the dollar since 2020, reduced its intervention in the market and started to buy dollars from the market after Mehmet Şimşek and the new economic administration came to power after the May 2023 elections.

Thus, the net reserves, which had fallen to minus 65 billion dollars and dragged the country into financial fragility, were showing improvement again. However, the Bank, which had filled its coffers, turned to ammunition again as the dollar became hot. The dollar has increased at a low rate of 0.9 percent since February 14, as the Central Bank met the demand for foreign exchange. At this point, the TCMB's net reserves, excluding swap and treasury foreign exchange, have fallen to the level of 50 billion dollars.

The figure in question had broken a record 2 weeks ago with 61.3 billion dollars. The process that started with TÜSİAD investigations, combined with rumors of 'Devlet Bahçeli's health condition, cabinet change' on Friday, created great damage on the reserves. According to economists, the TCMB will not allow serious volatility on the exchange rate in a possible foreign exchange demand by using its ammunition.

'The market got scared, the dollar moved'

Economist Mahfi Eğilmez, who noted that he calculated a meltdown of nearly $13 billion in the Central Bank reserves since February 14, said the following on a television channel: “There has been some movement in the exchange rate in recent weeks. It is not a big movement, it has gone above 36. Because there is a meltdown in the reserves. The latest political developments and statements seem to have caused some fear in the market. With this effect, people have obviously turned to dollars. The Central Bank has introduced dollars to the market.”