In a dramatic move that underscores the severe economic pressures piling up on Ankara, Turkey offloaded nearly all of its U.S. Treasury securities in March, according to estimates from Bloomberg that draw on U.S. government data. The country liquidated roughly $14 billion in U.S. sovereign debt, slashing its total holdings to just $1.6 billion – a far cry from the $80 billion peak it hit a decade ago.
This steep sell-off is rooted in a cascade of economic shocks triggered by the ongoing US-Israeli war on Iran, which has hit Turkey’s already fragile economy on multiple interconnected fronts. As a nation that imports nearly all of its energy needs, Turkey has been squeezed first by soaring global energy prices driven by regional conflict. Before the war began, roughly 14% of Turkey’s natural gas imports came from Iran; those deliveries have halted entirely following an attack on Iran’s key South Pars gas field, creating additional supply strains and cost pressures.
The conflict has also spurred broader global inflation concerns that have pushed U.S. Treasury yields sharply higher. For Turkey, this shift translates directly to increased borrowing costs on international markets, and has made the country’s already high-risk debt far less appealing to foreign investors.
Selling U.S. Treasuries is a standard step for emerging economies like Turkey looking to shore up their domestic currency. Nations typically draw on their holdings of U.S. debt to raise dollars, which they can then sell on foreign exchange markets to prop up the value of their own currency. Turkey’s lira has been caught in a years-long downward spiral, paired with persistent sky-high inflation that has eroded purchasing power across the country. Since the outbreak of the war on Iran, the lira has already depreciated roughly 5% against the U.S. dollar, making dollar-denominated energy imports even more costly.
Turkish policymakers have openly acknowledged the deep uncertainty hanging over the country’s economic trajectory. In May, the Turkish Central Bank raised its 2026 inflation target from 16% to 24%, citing persistent elevated volatility. Leading global financial institutions JPMorgan and Deutsche Bank project that Turkish inflation will climb to 30% by the end of 2024.
Separate reporting from Reuters added another context to the $8 billion portion of the sell-off: the country tapped those reserves to stabilize the lira after a Turkish court annulled the opposition party congress that elected Özgür Özel as head of the nation’s largest opposition party, removing him from his post and sparking short-term political volatility.
While Turkey is a relatively small holder of U.S. debt compared to other major regional players – Saudi Arabia holds roughly $150 billion in U.S. Treasuries, while the United Arab Emirates holds around $114 billion – the trend of broad liquidation carries broader global implications. If a growing number of countries follow Turkey’s lead and offload U.S. sovereign debt, yields will continue to rise, pushing up borrowing costs for both the U.S. federal government and American consumers across the board.