Central bank reserves fall for a fourth week as fund crisis weighs; Türkiye’s risk premium hits four-month high

The official reserve assets of the Central Bank of the Republic of Türkiye fell by $4.3 billion in the week ending September 18, when withdrawals from investment funds shook the stock market. According to data released by the bank on September 24, total reserves fell 2.4% to $174.4 billion from $178.7 billion a week earlier.

Total reserves have declined for four weeks; from $188.2 billion on August 28, the loss over the period reached $13.8 billion. In the same week, foreign currency assets fell 9.2% to $55.1 billion, while gold reserves rose 1.2% to $111.6 billion, cushioning the decline. According to Türkiye Today, citing official figures, the central bank sold more than $6 billion from its net reserves that week.

On September 17, the central bank moved to ease a lira shortage by increasing funding through one-week repo auctions, revising banks’ borrowing limits at its Interbank Money Market and reducing collateral haircuts. On the same day, the Capital Markets Board ordered 131 funds managed by seven portfolio companies into liquidation, saying 455,758 investors held stakes in them.

Pressure on markets continues. According to the latest report by Türkiye Today, Türkiye’s credit default swap (CDS) premium rose to a four-month high, every sectoral index on Borsa Istanbul turned negative, industrial stocks fell more than 4% and banking shares more than 2%. President Recep Tayyip Erdoğan said on September 24 that the crisis posed no threat to the wider economy.