Turkey has no payments, FX problems: Senior adviser

Turkey has adequate foreign exchange reserves to keep its financials healthy despite temporary volatility in the value of Turkish Lira and stocks after the Central Bank chief was replaced at the weekend, one of the senior presidential advisers said on March 23.

"Turkey has no problems in the balance of payments. Last year, the need of $95 billion was met easily ... Now [the foreign exchange] reserves are at $220 billion, not including money in households, mattress savings and deposits kept abroad," said Yiğit Bulut, a member of the Turkish Presidency Economic Policies Board.

He told Turkish broadcaster CNN Türk that individual investors sold U.S. dollars worth $5.1 and resident corporations sold $2.3 billion in profit-taking moves on March 22, when the lira plummeted nearly 8 percent to around 7.90 against the greenback.

"Turkey has no FX problems. They say that companies urgently need $180 billion. So, why did they sell their dollars? Because they think that they can buy back for a cheaper price," he said.

Giving information about his discussion with Şahap Kavcıoğlu, who was appointed as Central Bank's governor on March 20, Bulut assured that there would not be an extraordinary move to cut interest rates.

However, he stated that recent rate hikes, which put the key rate at 19 percent, should be reversed.

"As the key interest rate goes up, the inflation rate goes up too. The inflation rate will slip as interest rates decrease. It is normal that the inflation rate stays high in an environment in which the interest rate is around 20 percent," he said.

Bulut praised an economic model in which both the inflation and interest rates drop to single digits, and the abundance of money supports exports and economic growth.