CBRT Shifts Back to Dollar Purchases After $10 Billion Intervention

Political uncertainty eases as CHP congress court case is postponed, calming FX markets

The Central Bank of the Republic of Turkey (CBRT) has returned to a dollar-buying position after selling nearly $10 billion in foreign currency during the first two weeks of September to stabilize markets, according to a Reuters report citing traders.

The shift marks a turning point for Turkey’s monetary policy response to political turbulence, which had triggered intense demand for foreign currency earlier this month.

$10 Billion Defense of the Lira

• In the first week of September, the CBRT sold around $5.5 billion.

• During the second week, traders estimate sales of $4–4.5 billion, though official figures will be confirmed Thursday.

• The total reached nearly $10 billion in just two weeks—one of the largest recent interventions.

These moves came after investor fears surged over the possible annulment of the CHP leadership congress that had elected opposition leader Özgür Özel. The prospect of political instability drove a sell-off in lira assets and a rush toward foreign currency.

Court Decision Calms Markets

The pressure eased yesterday after an Ankara court decided to postpone hearings on the CHP congress annulment case. The delay reduced immediate political risk, helping the lira, equities, and Turkish sovereign bonds stage a rebound.

Credit Default Swaps (CDS), a key measure of Turkey’s risk premium, also narrowed as investor sentiment improved.

Traders told Reuters that in response to this calmer environment, the Central Bank halted FX sales and switched to buying dollars again on Wednesday, signaling confidence that panic-driven demand had subsided.

What This Means

The CBRT’s shift underscores how political developments can directly shape monetary operations in Turkey:

• Rapid defense: $10 billion spent in two weeks to cushion lira volatility.

• Policy flexibility: Quick pivot back to accumulation once markets stabilized.

• Fragile confidence: Investor risk perceptions remain highly sensitive to domestic politics.

With inflation still elevated and elections looming, the balance between currency defense and reserve rebuilding will remain a central challenge for policymakers.