Reuters: Turkish Central Bank FX Sales Reach $8 Billion as Markets Reel from Iran War
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Turkey’s central bank intervened heavily in foreign exchange markets on Monday, with traders estimating dollar sales reached $7–8 billion. The intervention came as oil prices surged and risk appetite weakened following U.S.-Israeli strikes on Iran and Tehran’s retaliation. Overnight rates climbed to 40% as the Central Bank of the Republic of Türkiye (CBRT) tightened liquidity conditions.
CBRT Sells Up to $8 Billion
According to traders speaking to Reuters, the CBRT began selling foreign currency in the morning hours, with total interventions estimated at between $7 billion and $8 billion.
One trader said:
“FX demand was strongest in the morning. Most of the central bank’s sales occurred then. Both demand and the pace of intervention slowed later in the day.”
The CBRT declined to comment.
Despite rising geopolitical tensions and a sharp increase in oil prices — a risk for Türkiye’s current account deficit and inflation outlook — USD/TRY moved only modestly higher from Friday’s close of 43.90 to 43.96, up less than 0.2%.
Overnight Rates Jump to 40%
In addition to FX intervention, the CBRT implemented a series of tightening steps:
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Overnight funding costs rose from 36.87% to 40%, aligning with the upper band of the interest rate corridor.
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The bank opened a one-day deposit auction worth 800 billion lira.
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Additional one-week and end-of-month deposit auctions worth 50 billion lira each were launched.
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Weekly repo auctions, which had provided limited liquidity, were suspended.
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The CBRT announced it would resume lira-settled forward FX sales, though no tender has yet been announced.
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Bankers reported that the central bank also took short positions in FX contracts in futures and options markets.
These measures are seen as efforts to absorb excess lira liquidity — estimated at more than 760 billion lira — while stabilizing the currency.
Borsa Istanbul Slides Sharply
The BIST 100 index closed down 2.71% at 13,346 points.
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Banking index: -7.43%
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Holding index: -3.90%
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Total trading volume: 186.2 billion lira
The index briefly fell to 12,987 before recovering some losses.
Global markets also showed signs of risk aversion. The MSCI Emerging Markets Index declined 1.84% on the day. U.S. futures stabilized slightly after earlier losses as investors assessed the oil market and geopolitical risks.
What Drove the Sell-Off?
1️⃣ Iran War and Energy Risks
Rising oil prices increase inflationary pressures and widen Türkiye’s current account vulnerability.
2️⃣ Inflation Concerns
Istanbul’s latest inflation reading exceeded 3% monthly, reinforcing expectations that the CBRT may abandon any rate-cut plans at its March 11 policy meeting.
3️⃣ False Incirlik Strike Rumor
Unverified social media claims that Iran had bombed Incirlik Air Base intensified intraday selling. The reports were later debunked, but they contributed to heightened volatility.
Inflation Data in Focus
Economists surveyed by AA Finans expect February CPI to rise 2.87% month-on-month.
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A reading between 3% and 3.5% may not trigger fresh panic.
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A higher figure could renew selling pressure.
Limited Upside for Equities
With most fourth-quarter 2025 earnings already released, strategy reports suggest the BIST 100’s year-end fair value implies only around 2–3% upside from current levels.
This modest expected return has increased the relative attractiveness of lira deposits for some investors.
Atilla Yesilada: “No FX Problem, But Geopolitical Risk Is Real”
Economist Atilla Yesilada stressed that there is no immediate shortage of foreign currency in Türkiye.
“The central bank can secure FX under any circumstances. There’s no need for speculation.”
However, he identified key risks:
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Escalating geopolitical tensions
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Premature interest rate cuts
Yesilada warned that potential targeting of NATO-linked facilities in Türkiye — especially the Kürecik Radar Station — could raise the country’s risk premium.
He also noted that foreign investors have been selling bonds, and limited equity inflows are insufficient to offset broader capital outflows.
Investment View:
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“Neither buy nor sell aggressively — protect capital.”
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Lira deposits and money market funds are currently rational options.
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Gold may continue to benefit in a chaotic environment.
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The upcoming Federal Reserve meeting is critical.
Tuncay Turşucu: Stay Calm
Market analyst Tuncay Turşucu attributed part of the decline to margin calls and forced selling.
Historically, he said, margin adjustments typically last one to two days. He expects:
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Potential corporate share buybacks once prices fall sufficiently.
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Professional investors waiting with cash to re-enter at lower levels.
“In the long run, what matters is not where the index goes, but where your company is headed.”
Companies with growing earnings, revenues and equity should not trigger panic for long-term investors, he argued.
Technical Levels
Analysts identify:
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Support: 13,200 – 13,100
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Resistance: 13,500 – 13,600
Outlook
Markets are absorbing the initial geopolitical shock, but volatility remains elevated.
Key variables in the coming days:
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Oil prices and Strait of Hormuz developments
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February inflation data
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CBRT policy stance
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Federal Reserve meeting
If perceptions grow that the Strait of Hormuz could remain disrupted for an extended period, renewed global selling pressure could follow — and Borsa Istanbul would likely move in tandem.
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