Currency interventions under Erdoğan administration
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The currency interventions under Erdoğan administration started as a result of the sale of foreign exchange reserves of the Central Bank of the Republic of Turkey (CBRT).
From 2019 to 2020, the CBRT sold foreign currency amounting to estimated $128bn to bolster the weakening Turkish lira. The opposition parties alleged that this was a violation of floating exchange rate regime and that the former chairman of the central bank Naci Ağbal was sacked for investigating the incident.[1][2] Further allegations are lack of transparency over the intervention data[3] and insider trading.[4][5]
Turkish President Recep Tayyip Erdoğan called the accusations "hullabalo" and "treachery" intended to scare away foreign investors.[3] CBRT does not publish its net foreign reserves, but independent estimates put it around negative $50bn after the sale.[1]
In March 2025, the CBRT sold another $12 billion, after the arrest of Ekrem İmamoğlu, President Erdoğan's main political rival, which triggered panic among investors. The action was taken after lira plunged 11% against the US dollar on 19 May.[6]
Interest makes the rich richer and the poor poorer. Interest is the cause of the inflation.[7]
Erdoğan, an ardent opponent of high interest rates, prevented the central bank officials from rising policy rates. This left policymakers with limited options to curb the inflation.[3] According to the estimates made by Kerim Rota, former banker and the vice-chairman of the Future Party, CBRT sold $33bn in 2019 and $93.3bn in 2020.[8]
Turkish economist Mahfi Eğilmez estimated that the central bank reserves were reduced to negative $39.6bn after excluding the swaps.[1] According to the former chairmain of the central bank Durmuş Yılmaz, the reserves were at negative $55bn.[5] The estimates provided by Goldman Sachs put it at negative $60bn.[3]
Throughout the fall of 2021, the Monetary Policy Board reduced the policy rates from 19% to 14%.[9] Despite selling billions of dollars from the central bank savings, lira depreciated from TL8.30 for $1 in early September to TL17.50 for $1 in mid December.[9][10] On December 21, the government announced the Exchange Rate Protected Time Deposits (Kur Korumalı Vadeli Mevduat) scheme to make lira more attractive, after which $/TL parity plateaued at around TL13.50.[9][11]
The Exchange Protected Deposits ensured account holders that any increase in the dollar/TL parity which is higher than the policy rate would be compensated by the Treasury.[12] Some economists called this an "implicit rate rise" and warned that it could burden the public finance.[13]