The Central Bank of the Republic of Turkey (CBRT) has announced that under the floating exchange rate regime, “the level of exchange rate is determined by supply and demand conditions in the currency markets, the volatility in the exchange rate is closely observed by the Central Bank, and the Central Bank may directly intervene in the markets in the event of an excessive volatility that might occur in both directions.”
In this regard, the Central Bank intervened directly in the foreign exchange markets on May 12 and 21, 2003, as a result of the excessive volatility in exchange rates. However, besides lack of demand for foreign exchange observed lately, the relatively low level of Turkish lira liquidity in market and the expectation that this situation could persist depending on this week’s Treasury auction results have increased the foreign exchange selling by giving rise to excessive volatility in exchange rates.
Therefore, the Central Bank directly intervened in the foreign exchange market Monday, June 9, by buying foreign currency in order to prevent excessive volatility. — (menareport.com)
© 2003 Mena Report (www.menareport.com )