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Lira Defense Drains Reserves Faster Than Turkey Refills Them

A pedestrian wearing a protective face mask checks his smartphone while passing an electronic currency exchange rate board in Istanbul, on April 27. — A pedestrian wearing a protective face mask checks his smartphone while passing an electronic currency exchange rate board in Istanbul, on April 27.
Photographer: Kerem Uzel/Bloomberg

By

Constantine Courcoulas and

April 28, 2020, 9:50 AM UTCUpdated onApril 28, 2020, 12:40 PM UTC

Turkey’s defense of the lira sent central bank net international reserves to the lowest level since last May even after it borrowed a record amount of foreign exchange from local lenders.

To bulk up its stockpile during the intervention, the central bank has been borrowing from local lenders and booking the liabilities from these transactions off its balance sheet. Since December, the total stock of currency swaps with a maturity of up to a year increased by $11.4 billion to $29.6 billion through the end of March, according to data published Tuesday.