Brookings Institution Senior Fellow Robin Brooks said on Monday that Turkey has fallen back into crisis, arguing that the Turkish lira is under heavy depreciation pressure and has remained relatively stable only because of large central bank intervention.
He made the remarks in a March 30 Substack post titled “Turkey falls back into crisis.”
Brooks said the lira’s resilience since the outbreak of hostilities was misleading. He wrote that the currency had held up better than the Brazilian real and Chilean peso but said that was not a sign of strength. Instead, he said, Turkey’s central bank had intervened on a scale at least as large as during the March 2025 market turmoil that followed the arrest of İstanbul Mayor Ekrem İmamoğlu, which he said triggered capital flight.
Brooks underlined that the recent rise in official foreign exchange reserves was also deceptive because it was driven by a drop in gold holdings. Pointing to the fact that the central bank sold and swapped 50 tons of gold worth about $8 billion, Brooks said even then official foreign exchange reserves rose by only about $5 billion after adjusting for valuation effects, meaning reserve losses were still continuing.
According to Brooks, the bottom line was that the lira was under strong depreciation pressure and that the government would eventually have to give way, as it did during the March 2025 crisis. He argued that President Recep Tayyip Erdoğan’s policy of pushing the economy beyond sustainable limits through bank-led credit expansion had repeatedly widened Turkey’s imbalances and set off currency crises.
He said the trigger this time was the war in the Persian Gulf and the related jump in oil prices, which has added strain to Turkey’s economy as a major energy importer.