Turkiye’s Central Bank Boosts Reserves by $7.5 Billion Amid Market Stabilization Efforts

Turkiye’s central bank continued to bolster its foreign currency holdings last week, increasing its total reserves by $7.5 billion in a bid to restore market confidence following sharp declines in March and April.

According to estimates from banking sources based on preliminary data released Tuesday, the central bank’s net reserves also climbed by $8 billion, reaching $48 billion. The increase comes amid a series of efforts by authorities to stabilize the lira and broader financial markets, which were rocked by political turmoil earlier this year.

In the past three weeks alone, the central bank has purchased around $13 billion in foreign currency. This marks a significant turnaround from its earlier stance, when it sold approximately $57 billion to support the Turkish lira during a period of heightened volatility triggered by the arrest and imprisonment of Istanbul Mayor Ekrem Imamoglu — a key political rival to President Recep Tayyip Erdogan.

The political crisis in March, centering on Imamoglu’s detention, led to a sharp deterioration in investor sentiment and prompted a shift in monetary policy. In response, the central bank raised its benchmark interest rate last month, halting a monetary easing cycle that had been in place since December.

Market observers are now keeping a close eye on overnight interest rates, which briefly dipped to the main policy rate of 46 percent last Friday before rebounding to 49 percent this week — the ceiling of the newly widened interest rate corridor. The return to the upper band indicates continued efforts to maintain tight monetary conditions and contain inflationary pressures.

Traders say that any sustained move of overnight rates toward the lower end of the corridor could signal a renewed shift towards easing, though such a step would depend on broader financial stability and political developments.

The central bank’s next policy meetings are scheduled for June 19 and July 24, and markets are likely to watch these closely for any changes in the current monetary stance.

The recent build-up in reserves is seen as a key measure to reinforce the country’s financial buffer ahead of any future volatility, while the central bank continues to balance market stability with its broader economic objectives.