Turkish Central Bank reserves rising steadily: Governor
“Although reserves may fluctuate due to periodic factors, there has been a consistent uptrend in reserves in the medium term,” Murat Çetinkaya told Anadolu Agency.
“Over the last week, our gross reserves have increased across all items by $4.3 billion and by March 27 reached $96.7 billion. During the same period, our net reserves also rose by $2.4 billion to $28.6 billion,” he said.
Early Thursday, the bank reported that its official reserves reached $100.1 billion as of the end of February.
Total reserve assets climbed 3.4 percent in February, up from $96.7 billion at the end of January.
Foreign currency reserves amounted to $77.6 billion in convertible foreign currencies, rising 3.7 percent over the same period.
Gold reserves surged 2.8 percent to $21 billion including gold deposits and, if appropriate, gold swapped.
On a yearly basis, the bank’s official reserves posted a 12.6 percent fall, as at the end of February 2018 the amount was $114.5 billion.
In December 2013, the bank’s total reserves hit all-time peak of nearly $136 billion, including some $21 billion in gold reserves.
The March 28 report also said short-term predetermined net drains of the central government and the bank climbed 5.6 percent on a monthly basis, reaching $13.7 billion in February.
“Of this amount, $9.1 billion belongs to principal repayments and $4.6 billion to interest repayments.
“Regarding the maturity breakdown of the principal and interest payments, $2.7 billion is due in one month, $2.5 billion in 2-3 months, $8.5 billion in 4-12 months,” the bank said.
In February, contingent short-term net drains on foreign currency were $31.8 billion, a 4.1 percent decline month-on-month.
According to the bank’s definition, the contingent short-term net drains on foreign currency consist of “collateral guarantees on debt due within one year” and “other contingent liabilities,” which are the banking sector’s required reserves in blocked accounts in foreign currency and gold, and the letters of credit items on the Central Bank’s balance sheet.
The bank increased the transaction limit of total swap sales which have not matured in the Turkish lira currency swap market.
Lenders’ limits will be 30 percent of their pre-determined Foreign Exchange and Banknotes Market transaction limits, up from 20 percent for non-matured transactions, according to a statement from the Central Bank.
On March 25, the limit was raised to 20 percent from 10 percent.
The unusual conditions in foreign over-the-counter FX swap markets do not reflect the true picture of Turkish lira markets, Turkey’s Borsa Istanbul said on March 28.
These conditions cause uncalled-for price movements, it said in a statement.
It added: “Pricing is continuing in a healthy way as usual in the swap market of our stock exchange.”
Accessing domestic markets from the foreign over-the-counter market would contribute to healthy pricing, the statement added.
“Foreign banks which are active in Turkey and members of Borsa Istanbul markets and institutions which are active in foreign over-the-counter markets can transact in our stock exchange. We invite all market players,” it concluded.
Turkish banks ‘obey regulation’
Meanwhile, Turkish banks operate in line with banking regulations, commercial practices and agreements, the president of the Turkish Banking Association (TBB) said on March 27.
In a statement, Hüseyin Aydın said investors should maintain confidence in the Turkish lira and continue their business in domestic and foreign markets in a healthy manner.
International media reports have alleged over the past few days that Turkish banks were not providing lira liquidity to foreign banks and swap rates consequently surged in international markets.
“These reports do not reflect reality,” Aydın said. “Lenders in Turkey are not a source of liquidity.”
Pointing to the availability and cost of the local currency, he said the Central Bank of Turkey’s tight monetary policy for reducing inflation and achieving financial stability is the most determinant factor.
Aydın noted that the amount and type of a transaction is a commercial decision for banks.
He also said the nature, quantity and price of transactions may vary due to banks’ portfolios, risk approach and management policy.