Reserves Management and FX Interventions

7 Pages Posted: 13 Dec 2019

Date Written: October 31, 2019


Policy normalisation in the major advanced economies affects emerging market economies (EMEs) through many channels, posing major challenges for their central banks. EMEs have adopted a policy toolkit including monetary, fiscal, exchange rate and macroprudential policies. Given many EMEs’ high external debt, the effective use of macroprudential measures and FX reserves is of great importance to contain financial fragilities in a challenging external environment. At the same time, central banks are taking a more active role in the FX markets. In particular, EME central banks are tending to use financial derivatives heavily as FX intervention tools. Therefore, it is crucial to establish whether these lead to a more efficient reserve management strategy and whether they are consistent with the broader policy framework. In this regard, this note first outlines post-crisis reserves management trends and central bank intervention strategies. It then surveys how the Central Bank of the Republic of Turkey uses its set of FX instruments, and their effects on the reserves and market liquidity.

Full Publication: Reserve Management and FX Intervention

Keywords: monetary policy, FX intervention, exchange rate volatility, macroprudential measures, financial stability

JEL Classification: F31, E52, E58

Suggested Citation

Republic of Turkey, Central Bank of the, Reserves Management and FX Interventions (October 31, 2019). BIS Paper No. 104y, Available at SSRN:

Central Bank of the Republic of Turkey (Contact Author)

Central Bank of Turkey


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