The Turkish central bank’s net FX position excluding off-balance sheet derivative items is estimated to have deteriorated by about $26bn since March 19, according to calculations by @e507.

In the early morning hours of March 19 (Wednesday), the country’s ruling regime detained Istanbul mayor Ekrem Imamoglu. On the day, the change in the central bank’s net FX position was positive as the regime intervened in the local currency via public banks.

On March 20 (Thursday), intervention reflected in the central bank’s financials to the tune of a $11bn decline. The position deteriorated by $3bn on March 21 (Friday), $12bn on March 22 (Monday) and $1.2bn on March 25 (Tuesday).

Chart: Daily change in the central bank’s net FX position (net of off-balance sheet items), estimates by @e507.

Turkey’s "orthodox" economic management does not provide information on the interventions made in the currency markets. The intervention volumes are estimated via the central bank’s financials.

The interventions are conducted via public banks. The sums that are burnt through can be reflected in the central bank’s financials with time lags.

Turkish central bank's net FX position
	A.1_FOREIGN ASSETS (Thousand TRY)	P.1_TOTAL FOREIGN LIABILITIES (Thousand TRY)	Net (A.1-P.1)	USD/TRY Buying	Net USDmn	2. Aggregate short and long positions in forwards and futures in foreign currencies	3. Other (specify)	Net (minus) swaps	Cumulative change (USD bn)
Dec 30, 2022	2,445,956,714	2,124,854,617	321,102,097	18.70	17,173	-67,762	-3,243	-53,832
Apr 28, 2023	2,277,778,749	2,459,484,877	-181,706,128	19.43	-9,353	-55,748	-3,273	-68,374
May 31, 2023 (Presidential elections)	2,027,939,331	2,445,400,390	-417,461,059	20.66	-20,203	-52,628	-2,336	-75,167
Jun 27, 2023	2,864,639,361	2,950,556,460	-85,917,099	25.82	-3,327	-57,163	-2,976	-63,466
Jul 31, 2023	3,101,850,551	3,097,283,604	4,566,947	26.93	170	-57,336	-3,089	-60,255
Aug 29, 2023	3,134,911,149	3,029,200,325	105,710,824	26.58	3,978	-69,534	-2,812	-68,368
Sep 29, 2023	3,401,758,038	3,066,441,887	335,316,151	27.38	12,248	-74,286	-2,673	-64,711
Dec 29, 2023	4,206,687,781	3,403,832,713	802,855,068	29.44	27,273	-69,353	-3,056	-45,136
Mar 29, 2024 (Local elections)	4,057,007,074	3,834,312,295	222,694,779	32.26	6,903	-76,653	-4,338	-74,088
May 30, 2024	4,675,489,675	3,476,230,575	1,199,259,100	32.25	37,188	-39,291	-4,680	-6,783	67
Jun 28, 2024	4,762,091,401	3,700,003,784	1,062,087,617	32.83	32,355	-24,565	-3,264	4,526	79
Jul 31, 2024	4,967,794,204	3,565,009,078	1,402,785,126	33.08	42,401	-23,112	0	19,289	93
Aug 29, 2024	5,142,259,219	3,967,022,626	1,175,236,593	33.92	34,644	-22,339	0	12,305	86
Sep 30, 2024	5,276,985,424	3,690,124,446	1,586,860,978	34.12	46,507	-21,247	0	25,260	99
Oct 31, 2024	5,563,833,663	3,731,622,343	1,832,211,320	34.18	53,607	-16,649	0	36,958	111
Nov 29, 2024	5,525,197,095	3,687,874,634	1,837,322,461	34.58	53,133	-19,879	1,398	34,652	109
Dec 31, 2024	5,538,776,105	3,594,647,626	1,944,128,479	35.28	55,105	-22,334	1,476	34,247	108
Jan 31, 2025	6,004,202,789	3,804,080,543	2,200,122,246	35.76	61,520	-10,324	3,834	55,030	129
Feb 28, 2025	6,091,906,671	3,944,582,247	2,147,324,424	36.38	59,023	-10,609	2,889	51,303	125
Mar 14, 2025	6,325,878,571	3,901,199,445	2,424,679,126	36.54	66,366	-11,091	2.596	55,278	129
Mar 17, 2025	6,363,122,732	3,946,515,879	2,416,606,853	36.61	66,002
Mar 18, 2025	6,368,731,117	3,929,446,366	2,439,284,751	36.59	66,661
Mar 19, 2025	6,403,041,748	3,955,647,958	2,447,393,790	37.98	64,432
Mar 20, 2025	6,313,473,157	4,182,508,464	2,130,964,693	37.92	56,204
Mar 21, 2025	6,262,527,231	4,190,883,023	2,071,644,208	37.85	54,733
Mar 24, 2025	5,894,637,157	4,201,446,446	1,693,190,711	37.86	44,722
Mar 25, 2025	5,948,778,416	4,217,801,329	1,730,977,087	37.91	45,662

Table: The central bank’s on-balance sheet FX position declined by $21bn from $67bn on March 18 to $46bn on March 25. This is certain.

On the off-balance sheet side, the central bank’s reserve swap (the central bank gives USD in exchange for lira) stock with local lenders declined by $6bn from $11.5bn on March 18 to $5.1bn on March 25. This figure further declined to $3bn on March 26.

Also on the off-balance sheet side, lira settled forward contracts stock rose by $2bn from zero on March 18 to March 25.

As a result of the interventions, the central bank’s net FX position is estimated to have declined to $31bn as of March 25. This figure saw minus $60-70bn at the heights of pre-July 2023 "unorthodox" policymaking period.

Chart: The central bank’s net FX position (net of off-balance sheet items), estimates by @e507.

No threat to regime

Since the detention of Imamoglu (made the ex-mayor by the authorities on March 23) a week ago, the Erdogan regime has struggled to stabilise the financial markets.

On March 19, the USD/TRY rate jumped into the 42s from the 36s during the morning hours. Since then, the regime has been drawing one of its trademark “straight lines” on the USD/TRY chart, at around the 38-level this time.

“Someone who does not have $100bn worth of Turkish lira to sell against USD would fall short of wounding Turkey’s central bank,” bne IntelliNews noted on March 20.

“For Turks, it is also not easy to buy dollars… the banking system will simply get in their way. When they rush to the exchange offices, they will see even higher spreads. If they collectively attempt to withdraw their money from the banks, they will face capital controls,” this publication added on March 23.

So, "reserves burnt" makes for good headlines but the Imamoglu tumult on the financial markets has yet to pose a threat to Turkey’s ruling regime.

Although the regime is signalling that it is panicking, a huge slap that would change the course of events is not expected from the market side.

In the medium term, after the Imamoglu dust settles, Turkey’s ruling elites will again give market-friendly signals and their customers within the finance industry who have stuck with them over the long term will not reject their highly profitable offers.

Ramadan holiday comes to rescue

Next week, on Monday (March 31) and Tuesday (April 1), there are public holidays marking the end of the Ramadan religious feast.

So, ahead of the regime are two more trading days this week to keep the lira afloat prior to the few days that will provide a break to draw breath.