Even direct access to Fed cannot save money reserves against over-speculation: Bank boss

ISTANBUL - Anadolu Agency

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The top chief of Turkey’s İş Bank has said the main point was to not trigger over-speculative moves in foreign exchange markets, especially in highly fluctuating periods, as there was no forex reserve, which is enough when needed in such periods. 

“When highly speculative demand is taking place, the forex markets can see record high levels. There is no forex reserve, which really helps when such a dramatic rise in the demand is the case, even you have a direct link to the reserves of the U.S. Federal Reserve [Fed],” İş Bank’s Adnan Bali said. 

Bali said he did not expect a serious rise in the Turkish banking sector’s borrowing or funding costs upon the monetary policies of the Central Bank, adding he accepted there were some rises in such costs. 

“I do not expect any major rise in such costs, but we’ll be taking dynamic and strategic policies if the opposite is the case,” he said, adding the sector’s profit margins have already decreased to 3.5 percent.
 
Bali said the high liquidity party in emerging markets was over, and traditionally safe havens have become popular again for money inflows. 

“Many emerging markets, such as Brazil, have felt this effect dramatically. Turkey has also been affected, partly due to its domestic uncertainties at this time,” he said. 

Bali noted the Central Bank’s tendency to simplify its monetary policies was good, as there was no room for complicated ways in today’s highly fluctuating markets.