Reserve Options Mechanism and Exchange Rate Volatility: An Implementation for Turkey

Lokman Kantar

Reserve Options Mechanism and Exchange Rate Volatility: An Implementation for Turkey

Abstract

Due to the flexible monetary policies implemented during the crisis, low-interest rates obtained funds has moved towards countries with emerging economies and that caused speculative attacks (the volatility in exchange rates, capital market etc. to make short-term trades.) on countries such as Turkey. Therefore, Turkey has developed a set of measures to ensure price stability along with financial stability. One of these measures is the Reserve Option Mechanism, which enables TL required reserves to be held in foreign currency. Foreign currencies entering the country through the Reserve Options Mechanism will not enter the economy directly, and some of this money will be kept by the CBRT as required reserves by banks. Thanks to this mechanism, it is aimed to reduce the volatility in exchange rates. In this study, the effect of Reserve Options Mechanism on exchange rate volatility has been examined. In this framework, the effect of the GARCH approach used in modelling volatility in the 2011-2016 period and the Reserve Option Mechanism on exchange rate volatility was researched. As a result of the study, it is concluded that the Reserve Option Mechanism (ROM) variable decreases the volatility.

Keywords

References

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Details

Primary Language

English

Subjects

Operation

Journal Section

Research Article

Authors

Lokman Kantar This is me
0000-0002-5982-6021
Türkiye

Publication Date

December 31, 2020

Submission Date

November 1, 2019

Acceptance Date

April 12, 2021

Published in Issue

Year 2020 Volume: 1 Number: 1

IZ

https://izlik.org/JA84XA94TJ

Cite

RIS / Bibtex

APA

Kantar, L. (2020). Reserve Options Mechanism and Exchange Rate Volatility: An Implementation for Turkey. Journal of Sustainable Economics and Management Studies, 1(1), 60-72. https://izlik.org/JA84XA94TJ

AMA

1.Kantar L. Reserve Options Mechanism and Exchange Rate Volatility: An Implementation for Turkey. ECOMAN. 2020;1(1):60-72. https://izlik.org/JA84XA94TJ

Chicago

Kantar, Lokman. 2020. “Reserve Options Mechanism and Exchange Rate Volatility: An Implementation for Turkey”. Journal of Sustainable Economics and Management Studies 1 (1): 60-72. https://izlik.org/JA84XA94TJ.

EndNote

Kantar L (December 1, 2020) Reserve Options Mechanism and Exchange Rate Volatility: An Implementation for Turkey. Journal of Sustainable Economics and Management Studies 1 1 60–72.

IEEE

[1]L. Kantar, “Reserve Options Mechanism and Exchange Rate Volatility: An Implementation for Turkey”, ECOMAN, vol. 1, no. 1, pp. 60–72, Dec. 2020, [Online]. Available: https://izlik.org/JA84XA94TJ

ISNAD

Kantar, Lokman. “Reserve Options Mechanism and Exchange Rate Volatility: An Implementation for Turkey”. Journal of Sustainable Economics and Management Studies 1/1 (December 1, 2020): 60-72. https://izlik.org/JA84XA94TJ.

JAMA

1.Kantar L. Reserve Options Mechanism and Exchange Rate Volatility: An Implementation for Turkey. ECOMAN. 2020;1:60–72.

MLA

Kantar, Lokman. “Reserve Options Mechanism and Exchange Rate Volatility: An Implementation for Turkey”. Journal of Sustainable Economics and Management Studies, vol. 1, no. 1, Dec. 2020, pp. 60-72, https://izlik.org/JA84XA94TJ.

Vancouver

1.Lokman Kantar. Reserve Options Mechanism and Exchange Rate Volatility: An Implementation for Turkey. ECOMAN [Internet]. 2020 Dec. 1;1(1):60-72. Available from: https://izlik.org/JA84XA94TJ