On 6/14/07, Sabri Oncu <[EMAIL PROTECTED]> wrote:
You need to distinguish between the Turkish Treasury and the Turkish Central
Bank:
The Turkish Treasury already has 35 billion Eurodollar Bonds outstanding and it
has to pay this USD debt no matter who holds the debt. The Turkish Central
bank, on the other hand, has about 50 billion US dollars in its reserves, 27
billions of which are in the US Treasuries.
What is there, other than the current law, that stops the Turkish Central Bank
to sell some of these US Treasuries and, with the proceeds, buy some of these
Turkish Treasury Eurodollar bonds?
The Eurodollar bonds - I assume they were paid for in dollars? If so
and if the Turkish central bank like the US Federal Reserve is
required by law to be lender of last resort to the treasury, we can
assume they are in effect the same entity. In that case, clearly much
of the $50B in reserves came from the sale of Eurobonds. Why does
Turkey need $50B in reserves? I don't know enough about Turkey to
answer this, but I'd assume they are just being cautious to prevent
any future currency crisis.
-raghu.
