Turkish Central Bank to sell dollar in daily auctions to curb volatility
Güncelleme Tarihi:
The Turkish Central Bank said Monday it will start daily dollar selling auctions to provide dollar liquidity in the markets after the lira hit all-time low against the U.S. currency. (UPDATED)
Problems which have occurred in international credit markets caused liquidity problems in several countries as of the second half of September 2008 and the bank has taken some measures to diminish negative impacts on the credit mechanism in the country, the bank said in the statement.       Â
The auctions will start on Tuesday and the daily volume to be sold will be $50 million. The amount could rise depending on market conditions, the statement also said.
The statement came after lira hit a record low of 1.82Â against the dollar, in addition to the rapid slide experienced last week.
"Moreover, if the dollar selling auctions will not be able to meet the liquidity need in the foreign exchange markets and if high volatility is observed as a result of speculative moves that may result from the reduction in liquidity despite the auctions, then the Central Bank could intervene by introducing direct dollar selling," the bank added in the statement.Â
The Turkish Central Bank earlier took a series of measures when the liquidity squeeze experienced in the markets was felt more intensely in the last quarter of 2008. At that time, 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.
The central bank also said that the decision to provide liquidity loans to banks, up to double their total equity, was considered as plan B.
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