Turkey's March Reserve Loss Hits Record High

Turkey's foreign exchange reserves experienced their largest monthly decline on record in March. The drop occurred as the Iran war triggered a global sell-off in emerging market assets, putting pressure on the Turkish lira. According to central bank data, this rapid erosion of reserves has increased the country's external financing vulnerability. The record decline in March was particularly driven by geopolitical tensions accelerating foreign investors' exit from emerging markets. The Iran war reduced global risk appetite, while the Turkish lira depreciated more sharply compared to other emerging market currencies. This prompted the central bank to use its reserves to intervene in the market. Analysts note that this rapid depletion of reserves increases Turkey's vulnerability to external shocks and limits the effectiveness of monetary policy. They warn that if the war continues, pressure on reserves may persist and the lira could depreciate further. This is not investment advice.