Turkey Liquidates US Treasuries Amid Economic Pressure from Iran War

Turkey sold nearly all of its US Treasury holdings in March 2026, reducing its total to $1.6 billion. This liquidation, amounting to approximately $14 billion, reflects the severe economic strain Turkey faces due to the ongoing US-Israeli conflict with Iran. The war has disrupted Turkey's energy imports, particularly natural gas from Iran, leading to rising energy prices and inflation. The Turkish Central Bank has raised its inflation target for 2026 to 24%, with forecasts suggesting it could reach 30%. The Turkish lira has depreciated by about 5% against the US dollar since the conflict began. This economic turmoil has resulted in increased borrowing costs and diminished foreign investment appeal for Turkey. The country typically sells US debt to stabilize its currency, but its holdings have significantly decreased from a peak of $80 billion a decade ago. The situation is compounded by political instability, as evidenced by a recent court ruling affecting the opposition party leadership.

Key Points: • Turkey liquidated $14 billion in US Treasuries, reducing holdings to $1.6 billion. • The ongoing US-Israeli war on Iran has severely impacted Turkey's economy and currency. • Inflation in Turkey is projected to reach 30% this year, exacerbating economic challenges.