The Turkish central bank’s net FX position, excluding net open FX-denominated swap stock, stood at minus $57bn as of November 24, suggesting a $3bn recovery compared to the minus $60bn seen at end-October and an $8bn recovery versus minus $65bn at end-August, according to the latest data.

Following the parliamentary and presidential elections held in May, the Erdogan regime let the Turkish lira depreciate, resulting in less FX spending to control the currency.

Meanwhile, exporters and tourism companies remain obliged to sell 40% of their FX income to the central bank, resulting in increases in the reserves. The central bank also draws some FX income from export rediscount credits.

The national lender’s in-balance sheet net FX position was also up as of November 24. It was posted as $26bn compared to the $18bn recorded at end-October and the record-low minus $21bn at June 1.

Meanwhile, the authority’s net open swap stock reached $83bn as of November 24 from $78bn at end-October and $57bn at end-July.

In the same period, the local banking industry’s net off-balance sheet FX surplus rose to $52bn as of November 24 from $47bn as of October 27 and $27bn as of May 26.

Given that the policy rate is on the rise, local banks prefer better costs at swap auctions to access central bank money, resulting in increases in the central bank’s gross reserves.

The IMF-defined net reserves, which also include the Treasury’s FX account in addition to the central bank’s in-balance sheet net FX position, rose to $36bn as of November 24 from the record low that was registered as minus $6bn on June 2.

The gross reserves also rose to $136bn as of November 24 from $98bn as of May 26. The figure stood at $130bn as of February 3.

As of December 1, the gross reserves were at a record-high level of $142bn.

Don’t lose your footing amid the numbers. Since 2018, Turkey has carried the risk of a severe balance of payments (BoP) crisis, which means a shortage of FX for vital imports.

However, the risk has so far remained just risk. Since the introduction of the latest monetary normalisation policy, kickstarted in June following the appointment of a new economic team after the elections, the risk has been declining as FX sales by the central bank and the current account deficit have been decreasing.

For the removal of the risk, the central bank’s net in and off-balance sheet FX position should at least turn positive. Until  that point, reports of gross sum “records” will not make much sense.