Reported 6 months ago
Turkey's central bank, previously criticized for selling reserves to support the lira, is now accumulating reserves to prevent the currency from appreciating too much. However, this strategy of flooding the financial system with liquidity to prevent excessive appreciation is causing challenges, such as the need to mop up excess liras. Turkey's managed currency is facing pressure to appreciate due to high domestic interest rates, making it a target for carry trade inflows. While the central bank is rebuilding its hard currency reserves, concerns remain about the sustainability of this approach in the long term.
Source: YAHOO