Bloomberg News reported on Thursday that Turkey sold almost all of its U.S. Treasury holdings in March as part of a strategy to prop up its currency during the Iran crisis.
“The amount of Treasuries held by Turkey fell to $1.8 billion by the end of March, down from $16 billion the previous month,” Bloomberg reported, citing “estimates based off official U.S. data.” These estimates included both Turkey’s central bank and private entities.
In addition to selling off its U.S. securities, the Central Bank of the Republic of Turkey has been selling other foreign exchange holdings, selling its gold reserves, and tightening its financing rules.
These emergency actions to prop up the lira after Turkey’s energy imports were impacted by the Strait of Hormuz crisis were accelerations of two trends that were already in place: most of the developing world has been taking drastic steps to reinforce its local currencies, and Turkey has been dumping U.S. securities as relations with America soured over the past decade.
Turkey imports almost all of its gas and oil, so the Iran crisis hit the Turkish economy hard. Not only did oil flows halted by Iranian terrorist attacks on shipping through the Strait of Hormuz impact Turkey, but Iran suspended exports of natural gas to Turkey in late March after an Israeli airstrike hit Iran’s gas field in South Pars, a crucial part of Iran’s energy infrastructure.
Turkey added a self-inflicted wound to its economic woes on Friday with a court decision that removed the leader of the opposition Republican People’s Party (CHP), Ozgurl Ozel. The CHP denounced the ruling as a “judicial coup” and Ozel refused to leave party headquarters in Ankara until the ruling is overturned.
Turkish markets went into a tailspin after the ruling was announced and the already shaky lira lost another chunk of its value, prompting the central bank to sell another few billion dollars’ worth of its foreign reserves.
“Borsa İstanbul’s benchmark BIST 100 index fell more than 6 percent after the decision, triggering a circuit breaker. Banking shares, which are more exposed to interest rate expectations and currency stress, dropped more than 8 percent,” the Turkish Minute reported.
In a note to clients on Friday, JPMorgan said the political upheaval from the Ozel court ruling came at “an unhelpful time” for the Turkish economy. Some commentators compared the situation to the way markets tumbled after Istanbul Mayor Ekrem Imamoglu, the presidential candidate from CHP, was arrested in March 2025.
Turkey’s assets rebounded somewhat after the initial turmoil, but top economic officials held a Financial Stability Committee meeting on Friday morning to discuss plans for reducing market turbulence.