Turkey’s state banks sold about $44 billion of hard currency in the first four months of this year and some $77 billion since the beginning of 2019 to support the lira, according to central bank data and the calculations of four bankers, Reuters reported.
Two of the bankers estimated more selling took place in May to boost the Turkish currency and offset an outflow of funds amid the coronavirus pandemic, bringing total sales this year to more than $50 billion.
The FX interventions by state lenders have heightened investor concerns over a drop in Turkey’s foreign currency buffer as its economy tips into a sharp downturn.
The central bank’s net FX reserves have fallen to as low as $26 billion this month, from $40 billion at the start of 2020.
The calculations and estimates are based on the central bank’s latest data. The bankers, who requested anonymity due to the sensitivity of the matter, previously estimated state banks sold at least $32 billion as of March.
Its governor, Murat Uysal, said last month that fluctuations in reserves are normal and temporary in such periods of stress.
Finance Minister Berat Albayrak has said the bank may intervene to reduce volatility in the currency.
The lira has outperformed most emerging market (EM) peers this year, even while it is down 15 percent against the dollar and hit a record low in May.
Adding to market concerns, Turkey’s external debt obligations are nearly $170 billion over the next 12 months.
Hunting for extra foreign funding, the government this month sealed a deal with Qatar to triple a currency swap line to $15 billion, helping to raise the central bank’s net FX reserves to $32 billion last week.