New record due as CBRT reserves’ post-election increase tops $44B

The total reserves of the Turkish central bank are envisaged to have maintained their record streak and reached a fresh peak last week, bankers’ calculations showed on Tuesday, continuing to climb since it embraced more conventional policymaking after the May elections.

The upward momentum has persisted since June after President Recep Tayyip Erdoğan appointed respected veteran policymaker Mehmet Şimşek as Treasury and Finance minister and former Wall Street banker Hafize Gaye Erkan as the Central Bank of the Republic of Türkiye (CBRT) governor.

The data due on Thursday likely shows that the CBRT’s reserves rose more than $1 billion (TL 29 billion) in the week through Dec. 15 to a record of some $142.5 billion, four bankers’ calculations showed on Tuesday.

This brings the increase since June to about $44 billion, according to the estimates.

The new administration reversed a yearslong easing cycle and delivered aggressive interest rate hikes to cool demand and stem inflation, which runs at nearly 62%.

Since June, the central bank embarked on a 3,150 basis-point tightening cycle – including hikes of 500 basis points in the last three months.

As it approaches the end of its cycle, the bank is expected to tighten its policy again on Thursday, but at a slower pace compared to previous months. Surveys see the authority raising the one-week repo rate by 250 basis points to 42.5%.

Investors have been signaling a renewed interest in the major emerging market economy following the May vote.

Official data showed foreign investors snapped up $1.45 billion (TL 42.17 billion) worth of Turkish assets in the week to Dec. 8, the highest level since July 2017.

Investors added a net of $891.4 million in Turkish domestic government bonds, the highest weekly inflow level since August 2017. Inflows into Turkish stocks climbed to a net $562.4 million, the biggest weekly amount since November 2020.

Amid the improving international sentiment, the cost of insuring Türkiye’s debt against default narrowed to a nearly three-year low last week.