Mustafa Sonmez: Turkey Elections: Currency fears grow ahead of presidential runoff

Source:al Monitor Date:24May2023

Has Turkey’s foreign exchange crunch become so grave that the authorities would limit even cash withdrawals from credit cards to keep the lira from plunging? The fragility is that alarming indeed and many fear it could become unmanageable soon.

Lying at the core of the fears is the near-exhaustion of the central bank’s foreign exchange ammunition. As of May 12, the bank’s gross gold and foreign exchange reserves totaled $105.1 billion and its net international reserves amounted to a mere $2.3 billion, the lowest levels since 2002. In fact, the net foreign exchange reserves stood at a negative $58 billion once outstanding currency swaps and deposits by foreign countries were deducted. Currency swaps with Qatar, the United Arab Emirates, China and South Korea and deposits from Saudi Arabia, Azerbaijan and Libya totaled some $36 billion.

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