Turkish Central bank upholds policy to implement on floating exchange rate

The Central Bank of the Republic of Turkey (CBRT) stated that it will continue to execute a floating exchange rate policy and that it will not commit to "any exchange rate level" as the LIRA has plummeted to a new low in currency markets.

According to reports, currency rates are set by supply and demand situations based on free-market dynamics, according to the CBRT. It declared that "under certain conditions, the central bank may merely interfere in excessive volatility without seeking any permanent direction." The bank also stated that the volatile Forex markets in Turkey are unrelated to the country's economy. "Unhealthy price forms are being witnessed in Forex markets that are unrealistic and utterly disconnected from economic fundamentals," the bank stated.

The CBRT "considered it necessary to issue a warning" to the country's businesses and citizens about "potential losses from trading at values utterly divorced from economic realities under exceptionally volatile market conditions."

The Turkish currency fell nearly 10 percent against the US dollar on Tuesday, to 13.44 liras, before recovering some of its losses in the late afternoon.

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