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Turkey’s forex reserves rise to $13bn as lira support ends

Turkey lira reserves Reuters/Dado Ruvic
The value of Turkey's lira has plummeted in recent years, but significant interest rates hikes have created more optimism

Turkey’s central bank’s net international reserves rose more than $3 billion to $13.17 billion in the week to July 7, continuing a strong rebound from record lows after the bank stopped using the reserves to support the lira.

The central bank’s net reserves fell to $5.7 billion in the week to June 2, their lowest since the data began being published in 2002, as authorities sought to counter forex demand and stabilise the lira’s exchange rate ahead of elections.

They turned positive again earlier last month. The central bank’s forex reserves have sagged in recent years due to costly market interventions and other efforts to cool forex demand.

Demand for dollars in Turkey surged to record levels in May on companies’ and individuals’ expectations that the lira, which lost 44 percent in 2021 and 30 percent in 2022, would plunge after the elections.

The currency has lost more than 28 percent so far this year, sharpening its decline last month in what traders said was a sign of Ankara moving away from state controls towards a freely traded currency.

The net forex reserves are still in negative territory once outstanding swaps, which stood at $37.90 billion on Wednesday, are deducted.