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10:36, 11 January 2017 Wednesday

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Speculative FX demand hurting the lira: Erdogan aide
Speculative FX demand hurting the lira: Erdogan aide

Lira's volatility comes from markets' shallowness due to need for structural reforms, and speculative moves, says advisor

World Bulletin / News Desk

 The recent demand for the U.S. dollar against the Turkish lira comes amid shallow market conditions and appear to be an overly speculative move, a top advisor to President Recep Tayyip Erdogan said Wednesday.

Speaking to Anadolu Agency, Cemil Ertem said despite the need in Turkey for structural economic reforms, this shortcoming alone does not justify such sharp volatility in foreign exchange markets, pointing the finger at speculation. 

“What are the core reasons for this phenomenon? The shallowness of Turkish markets due to the lack of structural reforms, and speculative moves,” Ertem said. 

“We see there is no substantial demand for foreign exchange currencies from our exporters. We see there is also no strong demand from public institutions. So where does this demand for foreign currencies come from?” he asked.

The demand is speculative and coming from foreign markets, he said, adding that it was spurred by the start of parliamentary debate over a package of constitutional changes to move Turkey to a presidential system. 

But Ertem said Turkey also needs to do its part in terms of structural reforms, adding that this is the only way to deepen the country’s financial markets and help prevent speculative moves from disrupting them.

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