Central Bank operation
replenishes foreign reserves

$3 billion raised so far through

program undertaken with banks

The Central Bank (BDL) started an operation in June – still ongoing – to replenish foreign currency reserves lost since the beginning of the year. The operation yielded $2.3 billion in June, according to a Bank Audi newsletter. It has surpassed the $3 billion mark since its debut, according to a banking source.

The operation involves getting banks to make simultaneous deposits at BDL in lira at one percent above market rates locked for at least seven years, and in U.S. dollar at one percent above market rates, locked for at least ten years.

The Central Bank has seen, at one point earlier this year, more than a $3 billion drop in foreign exchange reserves since the beginning of the year.

“The money flight was due to uncertainty around the renewal of the mandate of the Governor of the Central Bank, as well as threats of political jitters before approving the electoral law,” said a source at BDL, and confirmed by a leading economist at a major bank.

“This is definitely not similar to the swap operation undertaken last year,” the source at BDL said.

Central Bank reserves closed the month of June at $41.1 billion.

Bank deposits have seen a sizeable increase since the beginning of year. Total deposits grew 2.3 percent at end-June compared to a year ago, and 3.7 percent in comparison with the year before. Deposits in foreign currencies accounted for all of the growth. Deposits by residents accounted for 90 percent of the growth.