The net international reserves of Türkiye’s central bank are envisaged to have grown by more than $6 billion (TL 163 billion) last week, bankers said on Tuesday, maintaining an upward trend since the government started embracing more conventional policymaking after the May elections.
The increase would bring the Central Bank of the Republic of Türkiye’s (CBRT) net international reserves to $24 billion, four bankers told Reuters.
The reserves declined to minus $5.7 billion in early June, their lowest since data publication began in 2002, as authorities sought to counter foreign exchange demand and stabilize the Turkish lira.
But reserves have recovered strongly since, increasing $30 billion in around four months.
Net international reserves saw their largest weekly rise in July by $8.5 billion.
Gross reserves rose by about $4 billion as of Sept. 22 to around $125.5 billion, according to the bankers’ calculations based on central bank indicators.
After winning reelection in May, President Recep Tayyip Erdoğan named a new Cabinet, including two internationally accomplished bankers, Mehmet Şimşek as Treasury and Finance minister and Hafize Gaye Erkan as the governor of the central bank.
The administration reversed the yearslong easing cycle and launched aggressive interest rate hikes to tackle the country’s long-term inflation issue.
Under Erkan, the CBRT has hiked the benchmark one-week repo rate by 2,150 basis points to 30% in the last four months.
Under measures introduced last year, the central bank boosted reserves by buying 40% of exporters’ foreign exchange income, amounting to around $100 billion annually.
Earlier this month, Treasury and Finance Minister Şimşek said that Ankara had allowed the exchange rate “to be free.”
The central bank continues to acquire foreign exchange from tourism and a scheme known as KKM to protect lira bank deposits from depreciation.
Still, the bank is continuing steps to begin rolling back the scheme. It on Monday removed the minimum interest rate limit for such accounts, according to a document sent to banks and seen by two bankers.
The change allows lenders to offer rates below 30% for KKM deposits that were initially opened with lira rather than with converted foreign currency, one banker who saw the document told Reuters.
The bank began moving last month to urge conversions from KKM to standard lira accounts. The government expects deposits to remain mostly stable through the end year of and for a gradual phase-out in coming years.
According to regulator data, TL 3.3 trillion ($121.29 billion) was held in foreign currency-protected accounts as of mid-September, Daily Sabah reports.