Türkiye resumes US Treasury bond purchases after nearly a decade

Türkiye has resumed purchasing U.S. Treasury bonds for the first time in nearly a decade, marking an end to the sell-off trend that began in 2016 amid political tensions with the United States.

Türkiye increases US bond holdings

According to a source familiar with the matter, Türkiye’s decision to re-enter the U.S. bond market comes after years of geopolitical strains that significantly reduced the country’s holdings.

Bloomberg reported that the Central Bank of Türkiye (CBRT) initiated bond purchases to normalize reserve policies after achieving a healthier level of foreign exchange reserves.

Data from the U.S. Treasury Department indicates that Türkiye’s U.S. bond holdings increased by $10 billion over the past year, reaching $12 billion.

At its peak in the early 2010s, Türkiye held nearly $80 billion in U.S. bonds, but significant reductions occurred during Donald Trump’s first presidential term due to escalating political and geopolitical disputes.

Largest bond purchases recorded in October

The largest purchases were made in October 2023, one month before the U.S. presidential election, with acquisitions totaling $6 billion. These moves suggest a strategic shift in Türkiye’s approach to foreign reserve management and financial diversification.

Despite the increase in bond purchases, the Central Bank of Türkiye has not yet issued an official statement on the matter.

However, analysts suggest that Türkiye’s renewed interest in U.S. Treasury bonds reflects an improvement in U.S.-Türkiye relations and a broader strategy to strengthen reserves.

Market reactions and expert opinions

Tufan Comert, Global Markets Strategy Director at BBVA London, commented on the increase in Türkiye’s bond holdings, stating, “When reserves are strong, diversification becomes a logical step.”

His remarks indicate that Türkiye’s decision to buy U.S. bonds is driven by financial strategy rather than purely political motives.