Turkey could make use of a special allocation of the International Monetary Fund’s own currency to boost its foreign exchange reserves, Reuters reported on Wednesday.
The world’s leading finance ministers were due to back a new $650 billion allocation of IMF Special Drawing Rights to help countries hit by the COVID-19 pandemic, Reuters said.
While the distribution of the SDRs is heavily weighted towards bigger and wealthier countries that may have the least need for it, analysts estimate that the increase will provide about $21 billion in reserves to low-income countries.
The additional funds will still benefit nations like Argentina, Turkey, Sri Lanka and South Africa, which would see a boost of between 10 percent and 20 percent to their reserves, analysts at Citigroup calculated, according to Reuters.
Turkey’s central bank spent tens of billions of dollars of its foreign currency reserves last year defending the lira. Swaps conducted with state-run banks left its net reserves deeply in negative territory.
The central bank’s gross reserves of foreign currency totalled $53 billion in February. It had an additional $40.7 billion of gold, according to the bank’s data. Outstanding liabilities from derivatives activities totalled $58 billion and short-term net drains of the central government and the bank were $30.6 billion, it said.