Türkiye's Reserves Fall to $30.8bn Net After the Rate Cut: What Buyers Should WatchTürkiye's Reserves Fall to $30.8bn Net After the Rate Cut: What Buyers Should Watch

A week after the Central Bank of the Republic of Türkiye (CBRT) resumed rate cuts, the reserve figures behind the lira have become the more important number for foreign property buyers. According to a Türkiye Today report drawing on calculations by QNB economists, net reserves excluding swaps fell by $8.6 billion in the week ended 23 October, to $30.8 billion.

That is down from $50 billion in the week ended 11 September, before what the report calls September's fund scandal. The same report puts gross foreign-exchange reserves at $162.3 billion after a $6.8 billion weekly fall. These are press calculations of central bank data rather than an official CBRT statement, and the figures should be read that way.

What the reserve data says

The report estimates that the central bank has deployed $16.1 billion of foreign-currency reserves since the fund turmoil began, including about $5.7 billion of sales in the latest week. It adds that the CBRT bought foreign currency in only one week over that period and sold in every other week. Total reserves, it says, fell by $16.4 billion between 11 September and 23 October.

Not all of the weekly fall was intervention. The report attributes an estimated $2.5 billion of it to lower gold prices and $0.4 billion to a drop in public-sector foreign-currency deposits. Foreign currency held by banks at the CBRT under reserve-requirement arrangements rose by $1.9 billion, which supported the gross figure. Excluding that increase, the report puts net reserves at $42.8 billion.

The rate cut, and how the lira took it

On 22 October the CBRT cut its policy rate by 100 basis points to 36%, from 37%. Türkiye Today reported it as the first easing since January, after months of uncertainty over the economic effects of the Iran war. We covered the decision and its implications for foreign buyers in our earlier analysis.

The immediate market reaction was muted. EBC's market note put the lira at around 49.63 per dollar after the announcement, against roughly 49.60 at the previous close. It also noted that annual inflation had slowed to 29.73% in September, which we examined in our inflation piece.

Analysts differ on what comes next. A Capmad commentary describes the cut as the start of an easing cycle under tight reserve and foreign-exchange constraints, and says the November meeting will test whether further cuts are possible without renewed pressure on the lira and inflation expectations. A VT Markets note takes a more bearish view of the lira. These are market opinions, not forecasts we endorse.

Why reserves matter to a property buyer

A foreign buyer in Türkiye usually converts hard currency into lira at the point of purchase, so the lira's path affects the effective price in dollars, dirhams or pounds. The reserve cushion is the central bank's capacity to smooth that path. A lower cushion does not mean the lira will weaken faster, but it narrows the room for error if outflows continue.

Three points follow from the data:

• Pace of depreciation. The lira has been managed on a gradual path. We looked at the recent acceleration in an earlier piece on the rate decision. Sustained reserve sales are one factor to watch in whether that pace changes.

• Real property prices. Nominal house prices have been rising more slowly than inflation, as covered in our price analysis. A softer lira in dollar terms can partly offset that for a buyer with foreign-currency income, though it can also raise import-linked construction costs.

• Borrowing costs. A 36% policy rate still means mortgage finance is expensive in lira. Easing may take time to reach lending rates, if it does at all.

Demand has held so far

Reserve stress has not yet shown up in foreign demand. In our September sales report, total home sales fell 9.3% while sales to foreigners rose 9.9%. October figures will not be published until November, so whether the September-October turmoil changes buyer behaviour is not yet known.

Practical considerations

None of this amounts to a signal to buy or wait. A purchase decision depends on the currency of your income, your time horizon and whether you are buying for use, rental yield or a citizenship application. Anyone planning a purchase should model a range of exchange-rate outcomes rather than rely on today's level, and should build in the fees and valuation steps set out in our budgeting guide.

Multi Mulk helps overseas buyers with property purchases in Türkiye and with due diligence on the title and seller. For buyers considering the citizenship route, it also offers Turkish citizenship by investment advice, with a free written eligibility review. Programme rules and thresholds change, so speak to an adviser before committing funds.

Sources

• Türkiye Today — Turkish central bank deploys $16.1B from reserves after fund scandal
• Türkiye Today — Turkish central bank cuts rate to 36% in first move since Iran war
• EBC — Turkey Cuts Rates to 36%: What Does It Mean for USD/TRY?
• Capmad — Turkey's central bank cuts policy rate to 36% and reopens the debate on high rates
• VT Markets — CBRT cuts rates again as it flags economic weakness

Cover photo: Ben_Kerckx on Pixabay.