The drain on the central bank’s foreign currency buffers raises uncomfortable questions about Turkey’s balance of payments and its ability to roll over foreign loans – and how and from whom it would seek emergency reserves if necessary.
The voracious domestic appetite for hard currency, meantime, has become a critical gauge of trust in the authorities’ ability to manage the lira and the country’s finance during the harshest economic contraction in a decade.
Data released last week showed gross FX reserves at Turkey’s central bank dropped by some $3 billion (£2.3 billion) to $73.78 billion in the week to March 15. Meanwhile total forex deposits and funds, including precious metals, of Turkish local individuals hit a record high of $105.74 billion.
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