The Central Bank of Turkey will continue to conduct Turkish lira deposit buying auctions in May with a standard four-week maturity that was initiated in April 2002 as a supplement to its existing instruments. The aim of the auctions is to enhance the effectiveness of the bank’s efforts to sterilize the excess Turkish lira liquidity in the system, stated a press release.
As was in April 2003, the Central Bank will hold Turkish lira deposit buying auctions on Wednesdays and Fridays each week and the maximum amount at each auction will be limited to 200 trillion Turkish liras.
However, in the cases where there is an excess foreign exchange supply resulting from the reverse currency substitution process and the strong balance of payments position, the Central Bank may resume foreign exchange buying auctions with the aim of enhancing its foreign exchange reserves, without conflicting with the floating exchange rate regime, and without disrupting the long-term trend and the natural equilibrium level of the exchange rate.
Developments arising from the excess foreign exchange supply are being closely monitored by the Central Bank. In the event of a decision on the resumption of holding programmed foreign exchange buying auctions, the Central Bank will start the auctions by making the announcement in advance. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
