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Central Bank’s forex selling of $6 billion

12 3 0

One of the distinguishing features of Murat Çetinkaya, appointed governor of Turkey’s Central Bank in April 2016, was that he had little intention to intervene in foreign exchange markets by selling foreign currency.

If the Bank uses its tools sufficiently to protect the value of its money, this stance is right. Still, selling foreign currency is not necessarily a mistaken policy, it is just one of the legitimate tools that a Central Bank can use.

But we have seen that Turkey’s Central Bank has chosen not to sell foreign exchange, while also essentially avoiding using interest rates in an appropriate way. Since April 2016, forex selling tenders have not been held, while the Central Bank has also steered clear of increasing interest rates in a sufficient manner.

On the other hand, in 2017 the Central Bank had a policy that made it possible for rediscount credits to be provided to exporters and for foreign exchange earning services to be repaid in Turkish Liras. This way, the expected inflow of foreign currency was avoided, and this eventually meant the selling of foreign........

© Hürriyet Daily News