Turkey’s lira is back in the spotlight. After two months of stability, the currency is testing the 7-per-dollar threshold and tumbling to record lows versus the euro, rekindling memories of the August 2018 lira meltdown.
Speaking on Wednesday, Central Bank Governor Murat Uysal downplayed concerns about the bank’s depleted FX reserves, which he said would naturally fluctuate during a pandemic. He did not address a drop of as much as 1.8% in the currency this week that could put more pressure on that buffer.
Below are five charts showing the extent of the pressure on the lira.
It takes firepower to support a currency. Just how much of that the central bank has left has come into focus.
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Official data puts official net international reserves at $31 billion. But minus swap lines, gold reserves and lines to domestic banks, the number is negative, analysts calculate.
“Given the pace of reserve burn this year, we extrapolate that the CBRT will have used all of its reported gross reserves (mostly borrowed) by late summer/early autumn,” said Cristian Maggio at TD Securities.
Read more: Reuters
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