Turkey’s Central Boosts Short-Term FX Borrowing to a Record
Turkey Central Bank Short-Term FX Borrowing Tops Record in April
(Bloomberg) --
The Turkish central bank brought its short-term borrowing of hard currency from local lenders to a record as it looked to boost international reserves after an effort to defend the lira.
The monetary authority’s outstanding foreign-currency swap stock coming due within the next year rose by $5.9 billion in the month to $35.5 billion in April, according to the latest data published Thursday. It’s equivalent to about 40% of its gross currency reserves including gold, which stood at $86.3 billion as of the end of April.
The central bank has borrowed more than $17 billion of hard currency from local lenders through its swap facility this year, topping up its coffers as local lenders defend the lira by selling foreign exchange in the market. The central bank’s gross reserves have dropped by $20 billion in the period.
The Turkish currency has come under pressure from the economic fallout of the coronavirus pandemic, which threatened to exacerbate an outflow of foreign capital. The lira dropped to a record low of 7.2690 per dollar earlier this month. It has since rallied around 7% against the dollar and was trading at 6.7937 as of 11:30 a.m. in Istanbul.
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