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.
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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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