Foreign exchange purchase auctions would be resumed in line with our strategy to increase reserves moderately when favorable conditions occurred in the foreign exchange market. The second transaction that is conducted by the Central Bank in foreign exchange markets comprises foreign exchange interventions. They are made in order to prevent any excessive volatility that might occur in exchange rates and depending on the reasons for this volatility and potential developments. In this framework, the Central Bank may intervene directly to curb excessive volatility in either direction and use announcements and warnings. Let me elaborate on a point related to the excessive volatility interventions. As opposed to the auctions held in the framework of our strategy to build up reserves, these interventions do not have a mechanical nature. Each situation is analyzed according to its conditions and the decision for an intervention is made accordingly. Therefore, such interventions do not have a symmetrical nature. In this framework, in order to prevent excessive volatility, the Central Bank intervened directly in the foreign exchange markets 21 times (15 purchase auctions and 6 sale auctions) under the floating exchange rate regime. In the framework of both strategies, the Central Bank has made a net purchase of foreign exchange amounting to USD 43.7 billion from the foreign exchange market since 2002.
A 5-year period is very short for the structural achievements made in a country with a 30-year inflationary past to repair the fragility in expectations in a permanent way. Therefore, in a period where financial fluctuations were observed in all developing countries, the shortterm market fluctuations originating from foreigners’ exits were perceived to be much more negative in Turkey, although there was not a permanent deterioration in macroeconomic fundamentals. As seen in the table in the slide, there have been eight fluctuations since the year 2001 when the floating exchange rate regime was put into practice, and exchange rates have even surpassed the top value that was recorded in the recent fluctuation. However, to the extent that the program was implemented decisively and policies were conducted without any interruption, there had always been a return to the main trend where the Turkish lira appreciated. It should be kept in mind that this process is also the process for the Turkish lira to gain credibility. As long as macroeconomic fundamentals are strengthened and structural reforms are achieved, this process is likely to continue. Table.