Turkey Dumps U.S. Treasuries Amid Iran Crisis Fallout
Turkey sold nearly all its U.S. Treasury holdings, dropping from $16 billion to $1.8 billion by March, to defend its currency amid energy crisis and political turmoil.
According to Breitbart News, Turkish holdings of U.S. Treasury securities plummeted from $16 billion in February to just $1.8 billion by the end of March, based on estimates derived from official U.S. data that include both the Central Bank of the Republic of Turkey and private Turkish entities.
The Turkish central bank has deployed multiple emergency measures to shore up the lira, including selling foreign exchange reserves, liquidating gold holdings, and imposing stricter financing regulations. These actions represent an acceleration of two existing trends: developing nations worldwide taking aggressive steps to defend their currencies, and Turkey’s steady divestment from U.S. securities as bilateral relations have deteriorated over the past decade.
Energy crisis compounds economic pressure
Turkey’s near-total dependence on imported gas and oil has left the country acutely vulnerable to the Iran crisis. Iranian terrorist attacks on shipping through the Strait of Hormuz disrupted oil flows to Turkey, while Iran separately suspended natural gas exports to Turkey in late March following an Israeli airstrike on Iran’s South Pars gas field, a critical component of Iranian energy infrastructure.
The dual shocks to Turkey’s energy supply have delivered a severe blow to an already fragile economy struggling with currency depreciation and inflation.
Political turmoil triggers market panic
Turkey compounded its economic difficulties with a domestic political crisis on Friday, as Breitbart News reports, when a court decision removed Ozgur Ozel, leader of the opposition Republican People’s Party (CHP). The CHP condemned the ruling as a judicial coup, with Ozel refusing to vacate party headquarters in Ankara until the decision is reversed.
Turkish financial markets responded with sharp declines. The Borsa Istanbul’s benchmark BIST 100 index fell more than six percent following the announcement, triggering circuit breakers. Banking shares, particularly sensitive to interest rate and currency volatility, dropped over eight percent.
The central bank responded by selling several billion dollars more of its dwindling foreign reserves to stabilize the lira, which lost further ground following the court ruling.
Financial institutions warn of ‘unhelpful’ timing
In a client note issued Friday, JPMorgan characterized the political upheaval as coming at an unhelpful time for the Turkish economy. Market observers drew comparisons to the turmoil that followed the March 2025 arrest of Constantinople Mayor Ekrem Imamoglu, the CHP’s presidential candidate.
Following initial volatility, Turkish assets showed some recovery. Senior economic officials convened a Financial Stability Committee meeting Friday morning to formulate strategies for reducing market turbulence and stabilizing investor confidence.
With information from Breitbart News
