The Turkish Central Bank bought nearly $4 billion in forex earlier this week, one of its largest such daily purchases ever, according to bankers’ calculations on Friday, as part of its moves to accumulate foreign currency.
The four bankers calculated the size of the central bank’s foreign exchange purchase on Tuesday in the range of $3.3 billion to $3.9 billion. The central bank did not immediately respond to a request for comment on the issue.
Central bank data on Thursday showed its net international reserves had fallen just over $1 billion to $14.01 billion in the week to April 26, as it seeks to accumulate FX without disturbing the tightness in lira liquidity conditions, which could counteract its aggressive rate-hike cycle.
However its net reserves excluding swaps recovered to minus $48.6 billion last week from a historical low of minus $65.5 billion on March 29, just before local elections.
A trader on the foreign exchange desk of one bank said the central bank (CBRT) is reducing the volume of local swap transactions with banks.
“This means the CBRT is giving less lira (TL) liquidity to the system, equivalent to $17 billion,” he said. “We calculate that it has purchased $14 billion of foreign currency in the last month.”
He said the process is accelerating and moving clearly in favour of the lira.
“The CBRT is increasing reserves through the most valuable channel thanks to these inflows. If the process continues in this way, easing the restrictions on London swap limits may be on the agenda in the coming period.”
The central bank regularly increases its foreign exchange reserves through various regulations, notably taking 40% of exporters’ income, which contribute some $100 billion to reserves annually.
