Turkey Sells U.S. Bond Holdings Amid Economic Crisis

Turkey announced on Thursday that it had sold nearly all of its U.S. bond investments in March, a move aimed at bolstering its currency during the ongoing crisis in Iran.

According to reports, the value of U.S. debt Turkey held plummeted from $16 billion at the start of March to just $1.8 billion by month’s end. This data reflects a mix of figures from the central bank and private institutions.

Beyond offloading U.S. securities, Turkey’s central bank is reportedly divesting from other foreign assets, shedding gold reserves, and tightening lending practices.

This series of emergency actions, aimed at stabilizing the lira, has intensified two existing trends in Turkey. One is the broader pattern of many developing countries taking drastic steps to strengthen their currencies. The other revolves around Turkey’s ongoing reduction of American securities, which has been escalating as relations with the U.S. have soured over the last decade.

The Iranian crisis is putting significant strain on Turkey’s economy, particularly since the nation relies heavily on imports for its oil and gas. Disruptions caused by Iranian attacks on shipping routes have had ripple effects, affecting both Turkey and Iran alike.

Adding to Turkey’s economic burdens, a recent court ruling led to political unrest. The ruling affected the leadership of the Republican People’s Party (CHP), prompting opposition leader Ozgur Ozer to protest the decision. CHP representatives characterized the ruling as a “judicial coup,” with Ozer refusing to leave headquarters until it was reversed.

In the wake of this ruling, Turkish markets reacted negatively, resulting in a sharp decline in the lira’s already unstable value. The central bank consequently had to sell substantial amounts of its foreign exchange reserves to mitigate the fallout.

The benchmark BIST100 index on Borsa Istanbul fell over 6% following this decision, triggering a circuit breaker. Bank stocks, particularly vulnerable to interest rate fluctuations and currency instability, saw a drop exceeding 8%, as noted by Turkish Minute.

JPMorgan warned clients that the political upheaval from Ozer’s court ruling came at a particularly inopportune time for Turkey’s economy. Some analysts reflected on past market crashes, drawing parallels to the fallout surrounding the election of CHP’s Istanbul Mayor Ekrem İmamoğlu in March 2025.

While Turkish assets have partially recovered from the initial shock, economic officials indicated that the Financial Stability Committee is scheduled to convene to discuss measures aimed at curbing further market volatility.