EXCLUSIVE-Turkey’s BOTAS to tap cenbank forex and prop up lira, sources say

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ANKARA, Nov 17 (Businesshala) – Turkey’s state energy company Bottas is expected to turn to the central bank to help it meet a growing need for a hard currency and the lira to help fuel gas prices and peak consumption during the winter months. as demand surges during the period, two officials told Businesshala.

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Turkish officials said the government intended to help Bottas tap the central bank’s foreign reserves to limit any depreciation in the Turkish currency, which hit an all-time low of more than $10.5. But has fallen.

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The central bank declined to comment. The Treasury and Energy ministries did not immediately respond to requests for comment. BOTAS does not comment publicly on such matters.

One of the officials, requesting anonymity, said the hard currency requirement is expected to remain high until March. Bottas buys liquefied gas in the spot market, where prices have risen.

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Instead of securing the dollar in the open market – where the lira has declined 29% this year – Bottas may turn to the central bank. Official data shows that there has been a jump in such foreign exchange sales in the last month.

Rising buying of BOTAS could limit the recovery in the central bank’s overseas holdings, which ended in 2019 and 2020 to support the lira after using up some $128 billion in what analysts called unconventional market intervention Was.

“Demand for Bottas will be much higher than previously anticipated[and]such sudden demand could damage an already delicate balance,” the first official, requesting anonymity, said as he spoke on the issue. were not authorized.

The official said that the central bank will meet the demand in this period.

Another source said the government aims to limit any foreign exchange losses in the November-March period, as spot orders for natural gas will have a major impact.

The central bank’s total foreign reserves stood at $125 billion, the highest since 2015. Net reserves stand at $32 billion after diving below $10 billion in April, while holdings are markedly negative after excluding swaps with local banks.

Analysts say the central bank’s premature interest rate cut has hit the lira, adding that thin reserves and high foreign debt obligations have a deeper balance of private sector defaults and payment problems.

After a lull, central bank hard currency sales to BOTAS soared to $258 million last month, official data showed. In June — the only other month with such transactions this year — it sold $269 million to the energy importer.

A forex trader at a Turkish bank said on condition of anonymity that he understood the central bank had already met Bottas’ demand in October.

The trader said rising costs and low market liquidity make it very likely that the bank will continue to meet some Bottas demand this winter of more than $1 billion per month. (Editing by Jonathan Spicer and Barbara Lewis)

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