Turkey’s foreign reserves saw $17 bn dip ahead of election

A 15% decline
Turkey’s foreign reserves saw $17 bn dip ahead of election
Turkey's Central Bank saw a steep reserve decline

Turkey’s foreign currency and gold reserves dropped by $17 billion in the six weeks leading up to the recent general election. This was due to the government’s efforts to boost the economy and support the lira in the run-up to the closely contested election, a recent report by the Financial Times found.

The data shows that the Central Bank‘s foreign currency reserves decreased by $9.5 billion between March and May 12, while its gold holdings fell by $7.9 billion. This represents a 15 percent decline in both categories.

Read more: Türkiye’s net reserves dropped $7 bn since the quake

The decline in reserves has raised concerns among investors and analysts about Erdogan government’s unconventional economic policies.

The demand for gold has surged in Turkey, with local buyers seeking a safe haven to protect their savings amidst high inflation and a lira trading near record lows.

The recent general election in Turkey was considered a crucial moment for the country’s economy. However, the decision to schedule a second round of voting has added to the pressure on the lira and other Turkish assets in the run-up to the May 28 vote.

As of May 12, just two days before the recent election, the recorded foreign currency reserves for Turkey were $53.2 billion. However, this figure includes tens of billions of dollars that were borrowed through short-term agreements called “swaps” from domestic banks. Reserves had fallen significantly from $75 billion at the end of 2022.

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