Turkey’s central bank embarked on an “orderly realignment” of the exchange rate to help curb loan growth and its ready to defend the currency should that be needed, said Turalay Kenc, the bank’s deputy governor.
Over-valuation of the lira, credit growth and the current account gap became major challenges for Turkey and other emerging market countries when capital inflows started in late 2010, Kenc said in a speech at a conference in Istanbul today.
The central bank has the instruments and currency reserves to defend the lira against possible speculative attacks, Kenc said. Volatility in the lira is “low and we like it,” he said.
The lira declined 0.1 percent to 1.7825 per dollar at 2:04 p.m. in Istanbul. The lira gained 6 percent this year after declining 18 percent in 2011, the biggest drop among currencies globally.
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