Page 37 - TURKRptSept19

The central bank announced on August 5 in a written statement that it will also hold Turkish lira vs FX auctions with 1, 3 and 6-month maturities at its Turkish Lira Currency Swap Market. The authority has established the market in September 2018 and it has held auctions with 1-week maturity.
The central bank raised a total of $2.75bn at swap auctions with maturities of 1 and 3-month held on August 7-8, Reuters reported.
Turkey received around $1bn worth of funds from China in June under a swap agreement that dates back to 2012, two people with direct knowledge of the matter told Bloomberg. The June inflow was the first time Turkey received such a substantial amount under the lira-yuan swap agreement with Beijing, one of the sources said. The cash helped boost Turkey’s foreign reserves in an election month and at a time when they were under intense scrutiny from investors. Analysts said the transaction showed that the pressure the financing of the Turkish economy came under was even greater than believed. They also noted Turkey had of late refrained from further criticising Beijing over its treatment of Uighur people in “re-education camps”. Turkey and China signed the currency-swap deal seven years ago and have renewed it every three years. Turkey has been attempting to make similar agreements with other partners. Last year, as the Turkish lira crisis rocked Turkey’s economy, Ankara made a deal with Qatar for $3bn in inflows from the Gulf state.
The Turkish central bank's net international reserves stood at Turkish lira (TRY) 193.375bn ($35.32bn) as of August 9, data showed on August 16. They stood at TRY179.441bn lira a week earlier. Reuters compiled the figures using an exchange rate of TRY5.4744 to the dollar (the official rate from the previous day) compared to the 5.5815 used a week earlier. The figures are released every week on the central bank balance sheet as per a 2002 letter of intent agreed with the International Monetary Fund.
A bne IntelliNews analysis in late May outlined how Turkey’s net foreign currency reserves, excluding the amount raised via short-term FX swaps with local lenders, fell to minus $867mn as of May 17 from plus $1.33bn the previous week. The calculation was based on the central bank’s latest weekly balance sheet and the estimated outstanding amount raised through the swap transactions. The report related how the Central Bank of the Republic of Turkey (CBRT) persistently avoids calls from the markets to transparently provide details of recent developments in its FX reserves. It thus requires outside data mining to assess the actual situation.
“The unsettling realisation is that the Turkish government initially sold the central bank’s own FX reserves via public lenders from the beginning of March to mid-April to support President Recep Tayyip Erdogan’s Don Quixotesque battle to defend the battered local currency,” the bne report
37 TURKEY Country Report September 2019 www.intellinews.com