Business · Economy · 12 hrs ago
Goldman Sachs warns Turkey’s reserve losses could deepen
Turkey’s central bank reserves fell by $30 billion over the past year, after adjusting for changes in asset values.
Goldman Sachs warned the losses could deepen if interest rate cuts and election-related risks put further pressure on the reserves.
Reserves help protect the economy from financial shocks and can be used to support the lira when demand for foreign currency rises.
On Thursday, the central bank cut its benchmark rate to 36 percent from 37 percent, after holding it steady for five meetings.
Annual inflation eased to 29.73 percent in September from 31.51 percent in August, but the bank says energy costs remain a risk.
Turkey began raising rates in 2023 after years of low borrowing costs, aiming to slow spending and restore confidence.
The central bank says it will decide rate moves meeting by meeting and will keep policies aimed at curbing inflation; elections are scheduled for May 2028, though they could happen a few months earlier.
Goldman Sachs warned that Turkey’s central bank reserves could fall further after a valuation-adjusted loss of $30 billion over the past 12 months.
The bank said interest rate cuts and election-related risks could deepen the losses and threaten Turkey’s economic program.
The central bank cut its benchmark interest rate to 36 percent from 37 percent on Thursday.
Goldman Sachs said recovering activity and looser fiscal and monetary policies could limit further progress in reducing underlying inflation.
Turkey’s presidential and parliamentary elections are scheduled for May 2028, though officials have indicated they could be held a few months earlier.
- Who
- Goldman Sachs warned about the risk to Turkey’s central bank reserves.
- What
- The bank said reserve losses could deepen after a valuation-adjusted decline of $30 billion over the past 12 months.
- When
- The warning was reported on Friday. The central bank cut its benchmark rate on Thursday.
- Where
- Turkey.
- Why
- Goldman Sachs cited interest rate cuts and election-related risks. It said looser policies and recovering activity could hinder progress in reducing underlying inflation.
This story does not have two clearly opposing sides.
Turkey began reversing years of low interest rates and adopted policies intended to slow spending and restore confidence.
Turkey’s central bank reserves fell by $30 billion, adjusted for valuation changes.
The central bank cut its benchmark interest rate to 36 percent from 37 percent.
Goldman Sachs’s warning was reported by CNBC-e.
Turkey’s presidential and parliamentary elections are scheduled to take place.
- Valuation-adjusted reserve loss
- $30 billion over the past 12 months
- Benchmark rate after cut
- 36 percent, down from 37 percent
- Annual inflation in September
- 29.73 percent, down from 31.51 percent in August
- Scheduled elections
- May 2028