Mahfi Eğilmez Emphasizes CBRT Reserves and Sustainability

Economist Mahfi Eğilmez evaluated that the CBRT reserves exceeded 188 billion dollars as of August 20, stating that rather than the numerical magnitude, under what conditions this increase was achieved matters.

Background of the Reserve Increase

While the level reached by the Central Bank of the Republic of Turkey reserves maintains its place on the economic agenda, economist Mahfi Eğilmez drew attention to the mechanism behind this development. In his published evaluation, Eğilmez stated that CBRT reserves exceeded 188 billion dollars as of August 20.

High Interest Rate and Controlled Exchange Rate

Keeping the exchange rate on a controlled path and high Turkish Lira interest rates make staying in the national currency attractive in dollar terms for savers. In this environment, domestic individuals and companies, as well as foreign investors, tend to shift from foreign currency to TL.

Basic Dynamics and Health Status

The rise in reserves does not mean the same thing as a strengthening in the external balance of the economy. It is stated that increases stemming from the fundamental dynamics of the economy, such as exports, current account surplus, and permanent capital inflows, create a healthier picture.

Reverse Risks and Expectations

A warning is issued that the current mechanism can also work in reverse. It is stated that if expectations strengthen that TL interest will not cover the depreciation in the exchange rate or that control over the exchange rate cannot be sustained, a transition back to foreign currency could occur.