Posted by meb at October 25th, 2008

The Turkish Central Bank has decided to hold foreign currency selling auctions to prevent the recent problems in the international credit markets from affecting the orderly flow of liquidity in the country’s financial markets, the bank announced in a statement on Friday.

“The central bank has decided to ensure foreign exchange liquidity through dollar selling auctions…due to unhealthy prices caused by the loss of depth in the foreign exchange market,” the statement said.

The amount for the daily auctions is determined as $50 million, the central bank said adding that this amount could be increased if required.

The central bank will intervene directly with the foreign currency auctions unless the daily auctions meet the markets’ liquidity requirement and the volatility continues due to lessening liquidity, the statement added.

The central bank intensified its measures recently as the impact of the global financial crisis beings to be felt in the economies of emerging countries.

The bank resumed the foreign exchange depot market, in which it is the financial intermediary and regulator, and doubled the borrowing limit in this market.

On Thursday, the central bank said it had foreign reserves of $76.6 billion.

The central bank move came after the Turkish lira lost more than 30 percent of its value in a month amid global financial turmoil.

The lira — which stood at 1.2358 to the dollar in late September, traded slightly below1.70 levels against to the dollar morning trade on Friday.
source: Hurriyet daily

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