Forex held by Turks falls $4 billion; Lira declining

The Turkish Lira fell $4 billion to its lowest since 2021 amid concerns over the country’s economy and the direction of monetary policy.

The 2.77% drop in the Lira against the dollar on Tuesday brought the total reduction to $4 billion. It appeared as the biggest loss since the Lira began to rally in August 2018. The Lira is under the pressure of concerns about the direction of Turkish policy and the economy, affecting the currency’s position. The Lira’s drop also resulted from concerns about the impact of the U.S.-Turkish debate on the Turkish economy.

Turkish residents and their foreign currency and gold holdings dropped by almost $4 billion to $228.17 billion. Since July, this drop was their lowest level, data from the central bank showed on Thursday. The decline in foreign currencies and precious metals holdings was the first since a $3.7 billion decrease in August, data from the Banking Regulation and Supervision Agency showed. It was a sign of strain on the Turkish economy, which might grow 3% this year. Still, the decline was relatively moderate and mainly due to the decline in gold holdings.

The data showed that the week’s hard currency holdings fell by $2.2 billion.

In December, the forex and gold holdings beat a record high of $238.98 billion as Turks transformed savings during a currency crisis. That saw the Lira lose 45% against the dollar last year.

Other currencies besides Lira

The data showed U.S. investors continued to reduce their holdings of Japanese stocks in the week to Jan. 28, with the adjusted for the parity effect holdings falling by $2.2 billion. The data showed that the U.S. dollar strengthens against major currencies, making Japanese stocks more expensive for U.S. investors. The Japanese yen was the best-performing currency, up 0.63% against the greenback. The pound sterling was the worst-performing currency, down 1.95% against the greenback.

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