Turkish central bank says 'no commitment' to exchange rate

Ankara, Nov 24 (IANS) The Central Bank of the Republic of Turkey (CBRT) said that it upholds its policy of implementing a floating exchange rate and has no commitment to "any exchange rate level" as the lira has nosedived in forex markets to a record low.

In a written statement, the CBRT said that exchange rates are determined by supply and demand conditions according to free-market dynamics, reports Xinhua news agency.

"Under certain conditions, the central bank may only intervene in excessive volatility without aiming any permanent direction," it stated.

The bank also indicated the dramatic fluctuation in Turkish forex markets is divorced from the country's economy.

"In FX markets, unhealthy price formations are being observed that are unrealistic and completely detached from economic fundamentals," said the bank.

The CBRT "deemed it necessary to warn" the companies and citizens of the country against "possible losses by trading at values completely detached from economic fundamentals under extremely volatile market conditions".

The Turkish currency's exchange rate on Tuesday lost nearly 10 per cent to 13.44 liras against the US dollar before recovering some of its loss in late afternoon.

President Recep Tayyip Erdogan, who supports interest rate cuts, said late Monday that Turkey was in a "war of economic independence".