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Turkey’s net forex reserves at lowest on record  

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

The Turkish central bank’s net forex reserves dropped to their lowest level on record, standing at $-4.4 billion on May 26, data showed on Thursday, as it sought to counter forex demand ahead of and during parliamentary and presidential elections.

The bank’s net reserves dropped by some $4.25 billion last week, to their lowest level recorded since the data began being published in 2002.

They have dropped nearly $32 billion since the end of 2022 and turned negative last month for the first time since the first five weeks of 2002.

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 ahead of May 14 on companies’ and individuals’ expectations that the lira, which lost 44 percent in 2021 and 30 percent in 2022, will plunge after the vote. It continued to weaken after a runoff vote for the presidency on May 28, touching a record low of 22.95 on Wednesday and bringing its losses to 18 percent this year before it firmed again.

The exchange rate used by Reuters on Thursday was 19.9027. The net forex reserves are pushed deeper into negative territory once outstanding swaps, which stood at $31.45 billion on Wednesday, are deducted.