Turkey started buying US Treasuries for the first time in almost a decade, according to a person familiar with the matter, marking the end to a drawdown that began in 2016 amid heightened tensions with the US, Bloomberg reported.
The country’s central bank is purchasing US Treasury bonds as part of its efforts to normalize its reserves policy, with foreign-currency holdings now at a healthy level, the person said, asking not to be named because they weren’t authorized to comment publicly on the topic.
The amount of US Treasuries in Turkey’s reserves has increased by $10 billion over the last year to $12 billion, according to US Treasury data compiled by Bloomberg. Ankara dumped most of the holdings, which peaked at almost $80 billion a decade ago, after relations with Washington began to sour over a range of political and geopolitical disagreements during Donald Trump’s first term in office.
The biggest purchases totaled about $6 billion in October, the month before Trump secured his return to the White House.
Turkey’s central bank could not be immediately reached for comment.
“The rise in holdings now can be attributed to better relations and, stronger FX reserves, which makes it meaningful to diversify,” said Tufan Cömert, global markets strategy director at BBVA in London.
Turkey’s relations with its NATO ally have been tumultuous in recent years, but President Recep Tayyip Erdoğan is looking to improve them during Trump’s second term. Disagreements remain over Gaza’s future as well as the presence of US-backed Kurdish fighters in northern Syria, which Turkey sees as an extension of the outlawed Kurdistan Workers’ Party (PKK).
In the aftermath of his reelection in May 2023, Erdoğan reshaped Turkey’s economic policy by appointing investor-friendly names to restore confidence in markets and tame inflation that had surged to more than 80 percent.
Over the past year and a half, policymakers at the finance ministry and central bank have worked for a return to conventional policies, which included raising interest rates from single digits to as high as 50 percent, and rebuilding depleted reserves as confidence in lira savings improved.