Central Bank of Turkey sells $10 billion in two-week operation to support the country's lira, according to media reports.
The Turkish markets experienced a significant rebound in the past two weeks, with the BIST 100 index moving back toward record territory seen before the recent political turmoil. This positive trend was largely due to the Central Bank of the Republic of Turkey (CBRT) selling nearly $10 billion to stabilize the Turkish lira.
The initial intervention by the CBRT occurred on September 2, selling about $5.4 billion. In the following week, the bank sold an additional $4.2 billion. The total reserves of the CBRT remained nearly flat due to the combined effect of gold and currency movements over the two-week period, with the figure for the CBRT's reserves slipping by just over $2 billion the following week.
The rebound in Turkish markets was also influenced by the court's decision to postpone the opposition congress case, leading to a rebound in the BIST 100 index and a strengthening of the lira against major currencies. The BIST 100 index continued to rise, reaching 11,075 points in early trade on Tuesday and closing more than 6% higher, reaching above 11,000.
Yields on lira-denominated government securities dropped by more than 2%, while the cost of insuring Turkish debt decreased as credit default swaps (CDS) tightened to their lowest level since March. This indicates a reduced perceived risk in Turkish assets.
However, pressure on Turkish assets persisted following the CHP signaling it would not comply with the court order regarding the removal of the Istanbul provincial head of the main opposition Republican People's Party (CHP). Despite this, the former CHP chairman is not involved in congress annulment lawsuits, according to Kilicdaroglu's lawyer.
It is worth noting that the decision to remove the Istanbul provincial chairman of the Republican People's Party on September 2 was issued by the party's central executive committee and was not a court decision.
In conclusion, the Turkish markets have shown resilience in the face of political and economic challenges, with the CBRT playing a crucial role in stabilizing the lira and the court's decision to postpone the opposition congress case contributing to the rebound in the markets.
