Central Bank spends $ 75 billion on currency intervention in current year

An economist wrote in her analysis written in Bloomberg that the CBRT  Central Bank of Turkey) had intervened in the foreign exchange market with $ 75 billion to support the TL,  this year. The reason for this was the value of TL had fallen sharply due to the interest rate cuts, observed in one year. In other words the interventions carried out by the CBRT in the foreign exchange market to support the TL have reached 75 billion dollars since the beginning of the year.

The analysis stated that the CBRT’s latest interest rate cut would cause more damage to the TL with rising inflation, while negative net reserves would provide limited scope for further intervention.

9.5 BILLION SOLD PER MONTH

The article stated that an average of $ 9.5 billion in foreign currency had been sold monthly to support the TL. It was recalled that the CBRT’s net reserves excluding swaps were over minus 50 billion dollars, and it was noted that these interventions were not a long-term solution.

$75 BILLION INTERVENTION

It was stated that a total of $ 81.5 billion in foreign exchange inflows were calculated, but the increase in reserves since the beginning of the year was at the level of $ 6.7 billion, so that when this increase was taken into account, the intervention was calculated as about $ 75 billion.

In the analysis following expressions were used; “Our previous estimate, which we made using data up to July 29, showed that the CBRT might have intervened by $ 70 billion. July’s actual export data came in below our assumption and pulled down foreign exchange inflows by about $2 billion. IN August, we are currently estimating an additional intervention of $ 7 billion, which amounts to a total of $ 75 billion.”

EXPORT SHARE, KKM AND REDRAFT LOANS…

The analysis also estimated that the CBRT had increased its resources entering the reserves since the beginning of the year, and based on these resources, there was an inflow of about $ 101 billion to the reserves.

While it was calculated that the necessity of bringing the export price to the country and converting it had added $ 48 billion to the reserves, it was estimated that conversions to exchange-protected deposits (KKM) had contributed $ 39 billion this year. It was stated that the contribution of rediscovery loans had reached 14 billion dollars since the beginning of the year.