Jun 28 2018

Turkish foreign exchange reserves decline

The Turkish central bank’s foreign exchange reserves fell 4.2 percent to $107.3 billion in May.

Foreign exchange assets dropped 4.7 percent to $81.3 billion and gold reserves declined 2.4 percent to $24.5 billion, the central bank said on Thursday, according to business website Patronlar Dunyasi.

The figures cited by the central bank include reserves held on behalf of the nation’s banks. It didn’t provide data that excludes banks’ holdings.

Turkey’s reserves are declining amid a slide in the lira’s value against the dollar, making it more problematic for the bank to finance the country's widening current account deficit and to intervene in foreign exchange markets by selling dollars. The lira has fallen more than 15 percent against the dollar this year amid a sell-off in emerging markets and concern about economic stability in the NATO member country.

Some economists have suggested that Turkey might be forced into an International Monetary Fund program and use the capital to boost its reserves should another big sell-off in the lira occur.

Net reserves, excluding reserves held on behalf of banks, are less than $30 billion, according to economists' calculations.

Gold reserves in terms of weight fell by 8.6 tonnes to 532.7 tonnes, the biggest decline since December 2016, Patronlar Dunyasi said.