www.zerohedge.com
The last few months have seen the Turkish Lira rallying, rebounding off
record lows, despite nothing positive coming from that country... and now we may have a better idea of how this lift was achieved (or how investors were fooled).
As Bloomberg reports, according to two people with direct knowledge of the matter said, Turkey received around $1 billion worth of funds from China in June under a swap agreement that dates back to 2012.
The cash boosted Turkey’s foreign reserves in an election
month and at a time when they were under intense scrutiny from investors.
The scrutiny was due to the fact that, as we detailed previously, traders
were questioning the reality of Turkey's reserve data - which had been
grossly manipulated for swap contracts and was - in real terms -
practically zero...
The chart below shows two sets of numbers:
Turkey's true net foreign reserves, and the number that the central bank
had used for public consumption, which includes the nominal amount of
swaps.
So China stepped in to bail out Erdogan. The June
inflow was the first time Turkey received such a substantial amount
under the lira-yuan swap agreement with Beijing, one of the people said.
The question now is - what was Erdogan's quid pro quo here. With NATO
scrambling over Turkey's decision to install Russian missile defense
systems, is this 'friendly gesture' from China designed to confirm BRI
issues will be swept under the carpet?
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