Turkish ministers have no idea where forex reserves went – ex-bank chief

Former Turkish central bank governor Durmuş Yılmaz rejected explanations this week by a current and former minister about how the bank spent tens of billions of dollars of its foreign currency reserves last year.

They have no idea what went on, Yılmaz said on Twitter on Tuesday.

“For sure neither of them entered the foreign exchange buying and selling room,” he said. “They have no knowledge.”

Turkish opposition parties are demanding that the government provide full details of how the central bank managed to spend the capital, which they say totalled $128 billion, and where the money went. The reserves of foreign exchange are deeply in the red, when subtracting liabilities such as cross-currency swaps, according to calculations of official data.  

Turkish Treasury and Finance Minister Lütfi Elvan, appointed in November, said on Monday that the central bank sold foreign currency last year legally and no one could be accused of corruption. President Recep Tayyip Erdoğan did not order the sales, he said.

The central bank “carried out these sales-purchase transactions through a corresponding bank on electronic transaction platforms”, Elvan told the NTV television. No sales have been made since November, he said.

Nurettin Canikli, who served in ministerial positions between 2014 and 2018, said foreign and local investors sold liras for foreign currency last year, meaning Turkish companies would have fallen into financial strife had the bank not intervened.

“Roughly $95 billion was used” and much of the capital was now in the hands of Turkish householders, Canikli said in a televised interview with the Habertürk news channel on Monday. He is now a deputy head of the governing Justice and Development Party (AKP) responsible for economic affairs.

Yilmaz worked as central bank governor between 2006 and 2011. He has served as a parliamentarian for the opposition Good Party (İP) since elections in July 2018.