Turkey has spent more than $ 7 billion to support the pound in December


The country’s central bank has announced a return to controversial foreign exchange policy to support the pound in December, as President Recep Tayyip Erdogan’s insistence on lowering interest rates despite rising inflation has pushed the currency to a record low. .

Data released later this week showed that during the five inventions officially announced last month, the bank consumed a total of $ 7.3 billion.

The central bank has spent billions of dollars on its foreign exchange reserves in undeclared interventions carried out through Turkish state-owned banks, analysts said. These sales intensified after an emergency package announced late last month by Erdogan aimed at boosting savings and supporting the pound, according to market participants.

The pound recovered sharply after Erdogan’s plans were unveiled, falling from a record low of 18.36 against the US dollar to about 11 pounds / dollar by December 23rd. However, it has since dropped to almost £ 14 / dollar.

Goldman Sachs warned this week that the nation’s reserves had “significantly dropped” in the last month of 2021, by about $ 15 billion to $ 111 billion.

This drop is partly due to the sale of foreign currency to Botas, the national energy importer, which totaled $ 3.4 billion last month, according to new data released on Friday.

But Goldman Sachs said the numbers also suggest that “interventions may have taken place [valutare] to support the pound “around the date of Erdogan ‘s announcement.

The bank said net reserves, excluding money borrowed from Turkish banks and other global central banks, were minus $ 66 billion.

Erdogan, a lifelong opponent of high interest rates, has ordered the central bank to cut the monetary policy interest rate by 5 percentage points to 14% in the last four months of 2021, despite warnings about the impact on inflation growing country.

Taking into account inflation, which was at an official rate of 36% in December, interest rate cuts have pushed the real interest rate in the country to minus 22%. This discouraged investors from saving in pounds and put huge pressure on the currency, which lost about 45% of its value against the dollar last year.

For the most important news of the day, broadcast in real time and presented equidistantly, LIKE our Facebook page!

Follows Mediafax on Instagram to see spectacular images and stories from around the world!

The content of the website www.mediafax.ro is intended exclusively for your personal information and use. It is prohibited republishing the content of this site in the absence of an agreement from MEDIAFAX. To obtain this agreement, please contact us at [email protected]


Source: Mediafax by www.mediafax.ro.

*The article has been translated based on the content of Mediafax by www.mediafax.ro. If there is any problem regarding the content, copyright, please leave a report below the article. We will try to process as quickly as possible to protect the rights of the author. Thank you very much!

*We just want readers to access information more quickly and easily with other multilingual content, instead of information only available in a certain language.

*We always respect the copyright of the content of the author and always include the original link of the source article.If the author disagrees, just leave the report below the article, the article will be edited or deleted at the request of the author. Thanks very much! Best regards!