Turkey sells most US Treasuries as Iran-war pressures strain lira, says report

Turkey liquidates nearly all US Treasuries as Iran war bites economy: Report Submitted by MEE staff on Thu, 05/21/2026 - 19:24 Turkey sold $14bn in US Treasuries as it moved to support the lira This picture taken in Istanbul, Turkey, shows people looking at foreign exchange rates displayed against the Turkish lira, on 21 April 2024 (Yasin Akgul/AFP) Off Turkey sold almost all of its US Treasury holdings in March, in a sign of the deep economic pressure the country’s economy has come under as a result of the US-Israeli war on Iran. Turkey liquidated around $14bn in US Treasuries, bringing its total holdings of US debt to just $1.6bn dollars, Bloomberg reported on Thursday, citing its own estimates based on US government data. Turkey’s vulnerable economy has been hit on multiple fronts by the US-Israeli war on Iran. The country imports nearly all of its oil and gas from abroad. Rising energy prices have made those imports more expensive. Turkey also imported about 14 percent of its natural gas from Iran before the war, but those flows reportedly stopped after an attack on Iran’s South Pars gas field. Rising energy prices have also sparked global inflation concerns, sending US Treasury yields higher. The rise in yields has increased Turkish borrowing costs and made its riskier debt less attractive to foreign investors. A country like Turkey typically sells its holdings of US debt to raise US dollars, which it then sells in the foreign-currency market to support its own currency. The lira has been on a downward spiral for years, with Turkey battling persistent inflation. Some shipping industry professionals eye leaving Dubai for Greece Read More » The Turkish Central Bank in May increased its inflation target for 2026 to 24 percent from 16 percent, citing “elevated uncertainty”. JP Morgan and Deutsche Bank forecast inflation to hit 30 percent in Turkey this year. The lira has also depreciated around five percent against the US dollar since the war on Iran started, making imports priced in dollars, such as oil and gas, more expensive. Turkey’s US Treasury holdings fluctuate but have generally declined as the country tries to protect its currency. They reached a high of $80bn a decade ago. Turkey is a relatively small holder of US debt compared to other Middle East heavyweights. For example, Saudi Arabia has about $150bn in US Treasuries and the UAE $114bn. If enough countries sell US Treasuries, yields rise, making borrowing costs for the US government and American consumers more expensive. Reuters reported on Thursday that Turkey sold $8bn to support the lira after a Turkish court annulled the party congress that elected Ozgur Ozel as the chairman of the largest opposition party, effectively ousting him. Inside Turkey News Post Date Override 0 Update Date Mon, 05/04/2020 - 21:19 Update Date Override 0

Turkey Liquidated Almost All Of Its US Treasuries In March To Defend Crashing Lira Two months ago, at the end of March, we reported that Turkey was aggressively dumping its gold reserves in a panic scramble to obtain dollar funding, which Erdogan's regime was using to keep the Turkish lira from crashing, and to also pay for energy imports which had suddenly soared in price as a result of the Iran war. The violent selling by Turkey (and other emerging markets) was behind the brutal plunge in gold prices, which tumbled by more than $1000 from near all-time highs at the start of the war to the low 4000s by the time Turkey had done selling much of its gold.  Then earlier this week, we got another confirmation of Turkey's wild liquidation spree when the latest central bank data showed that Turkey’s foreign reserves had their biggest monthly decline on record in March, as the Iran war triggered global selloffs in emerging market assets and strained the lira. According to balance-of-payments data, Turkey's official reserves cratered by $43.4 billion in March. Part of the decline reflected state intervention to offset portfolio outflows. The current-account deficit, meanwhile, widened to $9.7 billion in March from $7.3 billion in February as a result of soaring commodity prices. A major energy importer, Turkey has been hit hard by higher oil and gas prices caused by the effective closing of the Strait of Hormuz and the resulting disruptions to world supplies of crude and refined products. Meanwhile, global banks have started changing their formerly favorable outlook on the lira, citing the exploding current-account deficit. Should inflation pressures persist, Turkey will have no choice but to pursue another accelerated devaluation of the Turkish lira.  “As international institutions continue to raise their average oil price forecasts for 2026, disruptions in supply chains and ongoing regional tensions — and their potential negative impact on transportation and tourism revenues — keep upward risks alive in year-end projections” for Turkey, said Istanbul-based economist Haluk Burumcekci. Turkish central bank Governor Fatih Karahan said last week that the ratio between the current-account deficit and gross domestic product would be “below historical averages” this year while acknowledging the upside risks. Yet as we said in March, while selling gold is a step of clear desperation for Turkey which had put in much efforts in recent years to build up a substantial gold stock, it is understandable for a regime that suddenly finds itself in a dollar funding crisis, the bigger question is did Turkey do the same with its holdings of Treasuries which are far more liquid and thus far less likely to move the market even when facing a sizable liquidation.  The answer, we learned today, is a resounding yes. According to Bloomberg calculations based on US Treasury data, Turkey sold almost all of its US Treasuries in March as it stepped up efforts to support its currency during the first month of the Iran war. The amount of Treasuries held by Turkey crashed to just $1.8 billion by the end of March, down from $16 billion the previous month, the data showed. The figure includes securities held by the central bank and other Turkish entities, including corporates. The decline coincided with a selloff in Turkish markets after the Middle East conflict erupted, sending oil prices sharply higher. The central bank moved immediately to prevent a crash in the lira by tightening funding conditions and selling off foreign exchange and gold assets. Its interventions also included swapping gold from reserves, although now that it has also dumped the bulk of its last ditch dollar reserves, those swaps will almost certainly end up forcing Turkey to hand over whatever gold was pledged.  Turkey’s Treasury holdings were as high as $21 billion in February 2025 after the country spent a year rebuilding reserves. They had peaked about a decade ago at $80 billion, before steadily declining as relations with the US soured over a range of political and geopolitical disputes, and as Turkey consistently sold reserves to maintain a smooth devaluation of the lira.  Despite the interventions, the lira has remained under pressure as the war drags on. Last week, the central bank raised its year-end inflation target to 24% from 16%, after data showed annual inflation accelerated to 32.4%. Turkish bonds have also suffered steep losses, with 10-year yields hitting record highs of 35.75%. And now that Turkey has no more gold or Treasurys with which to defend the currency, expect a sharp and painful death in the currency which has gone from less than 10 against the dollar five years ago to a record 45.6 today.. Tyler Durden Thu, 05/21/2026 - 11:20