EFTA01379422.pdf

22 December 2017 EM Currency Handbook 2018: Still Fuel in the Tank Turkey The Turkish lira (TRW was first introduced in 1927 and USD/TRY & EUR/TRY exchange rates replaced the Ottoman lira which had been in circulation $0 45 since 1844. After persistently high inflation from the 45 40 1970s to the 1990s, the lira was replaced by 'the New to Turkish Lira' (TRY) on 1st January 2005 at a rate of 30 1 TRY = 1.000,000 TRL. Following a four-year transition 3o period, the 'new' marking was removed and its official 25 25 name has again become 'the Turkish lira'. A three-year 20 I. 20 disinflation program was launched in 2000 which envisaged two different FX regimes. The first was a 13 4 'sIn 10 fixed exchange rate regime that incorporated daily 05 OS announcement of a currency basket (formed of USD 00 — 0.0 and EUR) until June 2001. The second regime, 2004 2005 2006 2001 KW 2009 2010 2011 2012 2013 2014 2015 2016 2017 implemented between July 2001 and December 2003, —....EUIVTRY slu --'•WO/n1Y/6s entailed introduction of a crawling peg regime against Sages Pam**6N, tikanto, fawne• LP the same basket. However, the program had to be abandoned during the 2001 crisis and the lira is now a fully floating currency with no target levels. USEXTRY end TRY 31v1 implied yields The primary objective of the Central Bank of the 14.0 4.1 Republic of Turkey (CBRT) is to achieve and maintain 130 ! price stability, while the Bank also considers financial 33 stability as a vital component for achieving its objective. 120 34 Furthermore, as long as not in conflict with the primary 3./ 110 3.6 objective of price stability, the CBRT also supports the 35 growth and employment policies of the government. 100 3.4 The CBRT adopted inflation targeting first implicitly 1 33 between 2002 and 2005. and then formally since 2006. 90 The target for 2015 and 2016 is 5.0% (+/- 2%). The CBRT is organized as follows: the Bank is led by a eon - ..- 1 32 - 91 board, which consists of a Governor and six members. de 1 40 or 40 046 eff e e The Board oversees the Monetary Policy Committee 3m Masa vi. Phs —360/TRY (MPC), which consists of seven members, and is led by Ante Daises Sant the Governor of the Central Bank. The Committee meets 8 times a year to set the policy rates. USD/TRY implied and historical volatility The CBRT intervenes directly or through flexible 25 auctions in the market, in case of unhealthy price 200 formation. The Bank purchased FX through daily auctions until July 2011, with the aim of building up 1$ 0 reserves. Since August 2011. the CBRT sold FX at daily 100 auctions with the aim of supporting the lira. At times of severe market stress the CBRT directly intervene by selling USD to the market. Since December 2014, the 00 CBRT has been selling FX directly to BOTAS, the state .50 energy importer, on a monthly basis to avoid undue volatility in the FX market. Since January 2017. the .100 2010 2011 2012 2913 1014 1015 2016 201/ Bank has also been conducting one-week FX swap auctions to release FX liquidity to the system. CBT has 11111190411trentol —Mel 3m vol — OM 3.333.7I also launched TRY-settled forward FX sale auctions Scwot. babas Dan, OtionOnfronotIP since November to support FX hedging efforts of the corporate sector. The lira is fully convertible and deliverable. Spot is generally quoted in USD/TRY, but EUR/TRY is regularly traded and other crosses such as TRY/ZAR and TRY/ILS are also quoted and traded.. Page 84 Deutsche Bank Securities Inc. CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0076887 CONFIDENTIAL SDNY_GM_00223071 EFTA01379422