TCMB returned to buying foreign exchange

The Central Bank returned to foreign exchange purchases in the markets as of April 3 after a long break. The bank, which entered the market when the USD/TL was approaching 31.90, continued its purchases throughout the day. The Central Bank of the Republic of Turkey displayed an active appearance in the foreign exchange markets as of April 3. On April 3, the bank switched from a seller to a buyer position in foreign exchange in the market. According to sources who provided information to Bloomberg HT, the TCMB's foreign exchange purchases in the market began when the USD/TL was falling towards 31.90. These purchases continued throughout the day, and the USD/TL transaction ended the day at 31.9598. Since the TCMB's foreign exchange purchases are not within the scope of direct intervention, the total amount of foreign exchange purchases is not disclosed. The interest rate hike had stopped the reserve erosion While the TCMB's reserves increased rapidly especially in the last quarter of last year after the new economic management, this year the situation was reversed. Since the beginning of the year, the TCMB's net reserves excluding swaps had decreased by $28 billion to minus $65.1 billion. Although not officially announced, it is stated that this decrease is largely due to the increased demand for foreign exchange in the market before the election. After the 500 basis point interest rate hike before the election, net reserves had increased by $200 million last week. Reports were effective The fact that local elections were over and the message that current economic policies would continue reversed the demand for foreign exchange in the markets. Reports from foreign banks were also effective in this. While a movement from foreign exchange to TL was observed in both legal entities and individuals, the Grand Bazaar exchange rate had fallen below the interbank rate for a while due to the effect of high effective foreign exchange sales on Monday. The fact that the Central Bank started buying from the levels of 31.95 increased expectations that the recently lost reserves would be rebuilt.