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Turkey Slashes US Treasury Holdings to $1.8 B, Defends Lira

5/23/2026

Summary

Turkey Cuts Reserves

Turkey reduced its U.S. Treasury holdings from $16 billion to $1.8 billion in March to defend the lira.
The sale freed foreign-currency reserves strained by rising energy import costs and volatile commodity prices.
Analysts said the move also reflects growing liquidity needs inside Turkey’s financial system.
Investors view the reserve shift as a signal of economic stress and policy direction amid stronger dollar conditions.

Summary

CHP Leader Ousted

A Turkish court on Friday removed Republican People’s Party (CHP) leader Ozgurl Ozel, sparking market turmoil.
Borsa Istanbul’s benchmark BIST 100 index fell more than 6 percent, triggering a circuit-breaker.
Banking shares, sensitive to interest-rate expectations and currency stress, dropped over 8 percent.
JPMorgan warned the political upheaval arrived at an unhelpful time for Turkey’s economy.
Turkey’s top economic officials met on Friday in a Financial Stability Committee to discuss reducing market turbulence.

Summary

Turkey Sells Gold

The Central Bank of Turkey drew down over 127 tonnes of gold reserves, its largest ever.
Since late February, it sold about $22 billion in foreign government securities to support the lira.
It raised the overnight rate to 40% while injecting TRY 1,174 billion daily as the USD/TRY rose to 44.5-45.6 by May.
Media coverage has not linked the Treasury liquidation to cryptocurrency markets.

Summary

Turkey Sells Treasuries

Turkey sold most of its U.S. Treasury holdings after the U.S.–Israeli war on Iran halted Iranian gas.
The conflict cut Turkey’s Iranian gas imports by about 14 % and dropped the lira five percent.
Post-sale, Turkey holds $1.6 billion in U.S. Treasuries versus Saudi Arabia’s $150 billion and the UAE’s $114 billion.
Analysts warn coordinated sell-offs could lift yields and borrowing costs, prompting shipping firms to consider shifting routes from Dubai to Greece.

History

Historical Context

In December 1994, President Ernesto Zedillo’s 13-15 % peso devaluation forced the Bank of Mexico to let the currency float, halving its value from MX$3.4 to MX$7.2 per dollar, triggering 52 % inflation and a $50 billion IMF-backed bailout. In 2024 Turkey responded similarly, selling $22 billion of U.S. Treasuries and 127 tonnes of gold to support the lira, illustrating how swift reserve sales can spike sovereign yields.

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Turkey Cuts Reserves

Turkey reduced its U.S. Treasury holdings from $16 billion to $1.8 billion in March to defend the lira.
The sale freed foreign-currency reserves strained by rising energy import costs and volatile commodity prices.
Analysts said the move also reflects growing liquidity needs inside Turkey’s financial system.
Investors view the reserve shift as a signal of economic stress and policy direction amid stronger dollar conditions.

1 / 5