| Summary: | Although foreign exchange rates (FER)
and inflation increased slowly between from 2002 and 2013, they increased
rapidly after that time and they have reached the highest level in 2018 on
annual base since 2006. Adverse developments in indicators like FER make negative
effects on economic actors by causing uncertainty and uneasiness. They also cause
adverse effects on a variety of macroeconomic indicators such as foreign debt
burden and interest payments. For this reason, it is important for countries to
determine causes of increasing in FER and take measures to keep them under
control. For this purpose, there are a lot of conventional tools like tight
monetary policy, tight fiscal policy, implementation of harmonious policies and
capital controls. In this context, reserves of CBRT are an important tool. However,
it is necessary to have adequate reserves in order to use reserves to keep FER
under control. Taking into consideration this fact, it is recommended to impose
reserve tax liability to financial institutions so that reserves of CBRT could
be increased.
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