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Turkey loses 23 billion dollars in the battle to enforce the lira

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The Turkish Central Bank’s foreign monetary reserve lost 23 billion US dollars within one year as part of its attempts to salvage the declining lira.

According to a survey prepared by Al-Ain Al-Akhbariya, based on the Turkish Central Bank’s foreign cash reserve data, net foreign reserves of cash decreased until the end of February to 54.4 billion US dollars.

The foreign exchange reserves recorded 77.4 billion US dollars in the corresponding period of last year, meaning that the size of the decline between the two periods amounted to 23 billion dollars, amid a decline in local market confidence in the Turkish currency (lira).

Ankara faces an anticipated escalation in the crisis of foreign exchange scarcity in the coming months, with the continued weakness of the export sector on the one hand and the continuing stalemate of the tourism sector on the other hand, as tourism and exports are among the most important components of providing the dollar locally.

And last month, the central bank admitted that activity in the services and productive sectors, and the uncertainties surrounding the short-term outlook, are dominated by negativity and slowdown compared to the period before the outbreak of the Corona pandemic.

Recently, the “dollarization” operations in the Turkish market increased by individual and corporate dealers due to their weak confidence in the local currency, whose sharp decline this year led to the erosion of citizens’ deposits, with changes in exchange rates.

Gold’s origins are eroding

.In a related context, Turkey’s gold assets declined as part of its reserve assets during the end of last February, compared to the end of 2020 figures, which means that Ankara has resorted to selling part of its gold reserves to provide foreign exchange.

According to the Central Bank, the value of monetary gold reserves until the end of February reached 40.7 billion US dollars, compared with 43.21 billion dollars at the end of last year’s transactions, a decline of 2.42 billion US dollars.

A survey conducted by Al-Ain News on the latest World Gold Council data issued last month showed that Turkey had sold more than 36 tons of yellow metal from the end of last September until last January.

According to the data, Turkey’s total gold reserves by the end of the third quarter of last year were about 583.3 tons, while the total reserves until last month were about 547 tons, a decrease of 36.3 tons.

Weak confidence in the lira

Ankara’s need for foreign exchange has increased during the past months, especially with a sharp drop in the local currency (the lira) exchange rate against the dollar to unprecedented historical levels of 8.53 pounds per one dollar, amid weak confidence in the local currency.

During 2020, Turkey witnessed a severe shortage in the abundance of foreign exchange for several reasons, most notably the decline in foreign exchange due to a decline in exports and a slight growth in imports, in addition to stagnation in the inbound tourism industry.

Currently, the exchange rate of the US dollar in the Turkish market is 7.53, which is a low exchange rate compared to pre-2018 levels, at which time the exchange rate was recorded at 3.65 pounds per one dollar, according to data from the Turkish Central Bank.

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