Turkey Props Up Reserves With Eye On Shaky Lira

Turkey’s central bank has bolstered its foreign currency reserves with billions of dollars of short-term borrowed money, raising fears among analysts and investors that the country is overstating its ability to defend itself in a fresh lira crisis, the Financial Times reported. Reported net foreign reserves held by the central bank stood at $28.1bn in early April — a sum that investors already believed was inadequate because of Turkey’s heavy need for dollars to cover debt and foreign trade. But calculations by the Financial Times suggest that this total has been enhanced by an unusual surge in the use of short-term borrowing, or swaps, since March 25. Stripping those swaps out, the total is less than $16bn. Analysts and investors, already skittish about putting money to work in Turkey given the direction of economic policy under President Recep Tayyip Erdogan, are concerned that the state of the financial defences leaves the country ill-equipped to deal with any potential market crisis. Read more