Türkİye, Economy

Turkey to 'not stand idly' by lira's volatility

Turkish administration cannot remain indifferent to progress of Turkish lira, Deputy PM Simsek says

19.01.2017 - Update : 19.01.2017
Turkey to 'not stand idly' by lira's volatility

By Ibrahim Yilmaz and Huseyin Karatepe

ANKARA

Turkish institutions will not stand idly by and witness volatility in the lira, Deputy Prime Minister Mehmet Simsek said on Thursday.

Speaking to BloombergHT television network, Simsek said the country’s administration cannot remain indifferent to the progress of lira against other currencies, adding it did not have a predetermined level for the lira.

“Foreign exchange rates affect the real sector, especially the ones with high foreign exchange deficits. We are studying the situation. There are serious efforts to hold current account deficit as well as other foreign exchange exposures at manageable levels to ensure Turkey does not face such problems in the future,” Simsek said.

“We will take macro prudential measures in the coming weeks and months on the issue,” he added.

Recalling the measure taken by the government in 2008 which prohibited households from borrowing in foreign exchanges, Simsek said the decision had been a right move and a similar approach may be used for companies.

“Now, we will study the borrowing style of ones which has no foreign exchange revenues. Also if one opts for a financial hedge [to be protected from foreign exchange rate fluctuations], it is a positive move,” Simsek said.

“We will look for ways to help our companies but at the same time we will set up rules which would prevent risks to accumulate,” he said.

Referring to the Central Bank’s stance against recent volatility in Turkish lira which reached a historic high of 3.94 against the U.S. dollar and later falling back to near 3.75 levels, Simsek said the credibility of the Central Bank is earned by making the right moves for the economy at the right time.

"Mandate of the Central Bank is clear and it has independence to choose its instruments,” he said, adding that he strongly believed the bank would do what is needed to ensure inflation target is met.

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