Mubasher: Turkish lira (TRY) plunged following a report showed that the central bank used billions of dollars in short-term borrowing to boost its reserves, the Financial Times (FT) reported on Thursday.

The lira sank as much as 1.9% against the US dollar to TRY 5.847 in early London trading, marking the lowest point since last October.

The drop in the Turkish currency came after the FT reported that the Turkish central bank used short-term borrowing through swap transactions to bolster its foreign currency reserves by $13 billion in recent weeks.

This stoked concerns over Turkey’s ability to protect its economy as it heads for a crisis.

Turkey’s net foreign currency reserves totalled $28.7 billion at the end of last week, compared with $28.1 billion in the preceding week, data released on Thursday revealed.

Excluding the short-term swaps borrowing, reserves as from 12 April would be $16 billion, up from $15.4 billion the prior week.

At the beginning of last March, net foreign exchange reserves amounted to $35.1 billion, stripping out swaps.

By 1:10 pm GMT, the USD/TRY pair jumped 1.49% to TRY 5.8280.