Goldman Sachs: "The Central Bank of the Republic of Turkey (CBRT) aims to limit the exit from Turkish lira deposits."

Goldman Sachs (GS) noted that the Central Bank of the Republic of Turkey (CBRT) aims to limit outflows from Turkish lira deposits. The report prepared by economists Clemens Grafe and Başak Edizgil emphasized that the CBRT has sufficient room to control the risk of dollarization. The analysis highlights significant evaluations regarding the CBRT's current monetary policy stance, suggesting that instead of pausing the interest rate cut cycle, the bank may prefer a more limited depreciation of the Turkish lira. The likelihood of a 250 basis point interest rate cut at the upcoming Monetary Policy Committee (MPC) meeting in April has increased, although the CBRT has not changed its exchange rate target.

According to Goldman Sachs, the CBRT's gross reserves have reached an all-time high of $174 billion, with net reserves (excluding swaps) showing an increase of approximately $100 billion since the beginning of last year. This increase enhances the CBRT’s capacity to intervene against potential fluctuations in the foreign exchange market. The report indicates that this reserve growth will serve as a buffer against a possible increase in foreign currency demand, allowing the CBRT to manage the risk of dollarization effectively.