Forex transactions made transparently: Central Bank governor

ANKARA

The Turkish Central Bank has prioritized financial stability and protecting the national economy during the COVID-19 pandemic and conducted foreign exchange transactions transparently during this period, Governor Şahap Kavcıoğlu said on April 16.

Regarding questions brought forward by opposition parties on the alleged $128 billion FX reserves sold by the Central Bank in a bid to curb the rising U.S. dollar/Turkish Lira exchange rate, Kavcıoğlu told Anadolu Agency: “As in many developing countries, rising capital outflows, decreasing direct investments, increasing demand to gold and FX earning activities, such as tourism and exports, coming to a halt under extraordinary conditions caused by the pandemic caused a high foreign exchange demand in Turkey’s economy.”

The Central Bank acted to meet foreign currency liquidity demand in a bid to provide macro-financial stability, he added.

Those moves helped protect the Turkish economy’s production infrastructure, employment and export capacity, said Kavcıoğlu, adding that the real sector, financial institutions and public companies faced no hurdle in fulfilling external liabilities.

“Thanks to steps taken in both monetary policy and fiscal policy, Turkey was one of the two G20 countries posting growth in 2020 despite the adverse impacts of the pandemic,” he said.

Pointing to a protocol signed by the Central Bank and the Turkish Treasury to regulate FX sales through state banks in 2017, Kavcıoğlu underlined that all those transactions are made transparently under international standards.

The governor strongly denied claims that FX transactions were made with some banks and firms below-market prices, emphasizing that platforms used by the bank “technically” do not allow making transactions with “non-market” pricing.