The Financial Times: Turkey has increased its reserves by billions of dollars through loans



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The Financial Times: Turkey has increased its reserves by billions of dollars through loans

The Turkish central bank has increased its foreign currency reserves by billions of dollars through short-term loans, not through the accumulation of dollars, according to a Financial Times report.

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Turkey's net reserves, according to data from Turkey's central bank, totaled $ 28.1 billion earlier this month, an amount investors felt was insufficient due to Turkey's strong need to cover debt and foreign trade.

High reserves have reassured investors about Turkey's economic situation, but FT's analysis has raised questions about the recovery.

The calculations showed that these reserves were driven by the extraordinarily high use of short-term loans since March 25, analysts said, raising concerns that Turkey is overestimating its ability to defend itself in the new lira crisis.

In response to questions from the Financial Times, the Turkish central bank acknowledged that its use of currency swaps "may affect reserve values," but stressed that the method of calculating the value of reserves is in full compliance with international standards .

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"This is not a (traditional) way of accumulating central bank reserves," said a former central bank official.

At the end of last month, the Turkish lira fell briefly after data showed a sharp decline in international reserves, recalling the crisis that hit the Turkish currency last summer and led to inflation and the first recession in a decade.

"There's a general concern about what's going on behind the scenes," said Tim Ashe, emerging markets strategist at BlueBay Asset Management. "The lack of transparency undermines the already fragile credibility of the central bank."

Five other analysts who have closely studied the actions of the Turkish central bank in recent weeks have also expressed concerns over the use of short-term loans to increase reserves, adding that the funds taken should be deducted from net reserves.

Source: "Financial Times"

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