Turkish locals have continued to trim their hard currency holdings, albeit at a slower pace, according to central bank data.
Their foreign exchange (forex) and precious metals holdings fell to $234.73 billion (TL 1.72 trillion) in the week ending on Feb. 19 from $235.63 billion a week earlier, the data from the Central Bank of the Republic of Turkey (CBRT) showed Thursday.
The hard currency holdings dropped by $893 million. When adjusted with the parity effect, the data showed the holdings fell by only $27 million in the period.
The forex holdings touched a record high of $236.11 billion in January.
The central bank is watching keenly for a reversal in this dollarization trend before it starts rebuilding its forex reserves.
The bank’s new governor, Naci Ağbal, earlier this month said there were signs that Turks were shifting toward Turkish lira assets, suggesting a reversal in dollarization.
He had said the reversal would be an important signal as the CBRT decides when to start rebuilding its own forex reserves.
Ağbal in January stressed the CBRT would patiently rebuild its reserves and has called off a hunt for foreign swap lines that saw it reach out to Washington, London, Tokyo and other capitals last year. He said the bank would instead opt to rebuild the reserves via auctions.
Data also showed on Thursday that foreign investors bought $194.5 million worth of Turkish government bonds in the week ending on Feb. 19, and sold $122.8 million worth of stocks.
Separately, data showed the central bank’s gross forex reserves rose by $144 million to $53.86 billion in the same period from $53.72 billion a week earlier.