Page 44 - TURKRptAug20

The only state bank buyer was Ziraat with $9mn worth of purchases, he also wrote on Twitter.
The central bank on July 20 sold 4,002 units of August 2020 futures with a strike price of 6.9311 (each contract is worth $1,000) at Borsa Istanbul. (BloombergHT)
The level of central bank reserves has been a concern for some Turkey analysts since last year, when the authority began borrowing foreign currency from commercial lenders through swap agreements, Bloomberg recalled.
The central bank’s gross FX reserves fell further from $49.6bn as of July 10 to $49.2bn as of July 17 while gold reserves fell from $40.4bn to $40.2bn.
The central bank’s open swap stock stood at $55bn at end-May, according to the latest data.
State lenders’ net FX deficit, meanwhile, slightly declined from $9.3bn as of July 10 to $9.1bn as of July 17.
While the central bank and state lenders’ short FX position is booming, USD/TRY volatility has fallen to interestingly low levels for a currency that is officially subject to a floating exchange rate regime.
On July 18, the central bank hiked FX reserve requirement ratios to increase its required reserves holdings by around $9.2bn.
The Turkish lira slumbered for two months, largely held in a narrow band of 6.84-6.86 to the dollar, but on July 28 it ​woke up​ with a start,​ realised that in the cold light of day it had feet of clay and crumbled as far as 6.98, the weakest rate seen in a month. There had been rumblings that the corridor was not viable, such as a flash crash on July 3 when the USD/TRY jumped in the blink of an eye to 6.97 before racing back to 6.84-6.86 and a similar occurrence on July 27, but July 28 brought confirmation that the lira’s troubles may be back with a bang. It ended the day at around 6.93 as officials scrambled to build a new wall.
A sure sign that this latest volatility is more than a flash in the pan and has Turkish President Recep Tayyip Erdogan rattled is that the “presidential
44​ TURKEY Country Report​ August 2020 ​ ​www.intellinews.com