Özet:

The increase in volatility of exchange rates and rapid change in the level of exchange rate with the transition to flexible exchange rate systems in parallel with the liberalization of capital movements between countries make it difficult to achieve the goals of ensuring price stability in emerging markets. Central banks intensively intervene in the foreign exchange market to prevent or slow down increases in the general price levels resulting from the change in the exchange rate, try to reduce volatility and change the level of exchange rate. Turkish Central Bank is also involved in direct purchase interventions to accumulate reserves, to stop exchange rate volatility and the upward trend in exchange rate. The effectiveness of the Central Bank’s intervention in the Foreign Exchange market is widely discussed in the literature. Purpose: This paper analyzes the effectiveness of interventions carried out by the Turkish Central Bank for the foreign exchange market between 29.03.2001-17.12.2021. Method: The effectiveness of the CBRT's interventions to reduce its volatility was analyzed with ARCH (Autoregressive Conditional Variance of Variance) models. The findings showed that the most suitable model was the E-GARCH model. Findings: Excluding limited and small rate success in direct purchase interventions, direct sell interventions are not effective in changing the level of the exchange rate. It was concluded that the increase in the overall level of prices could not be controlled by exchange rate interventions. Originality: It is expected that the study will contribute to the literature both in terms of the period it covers and in terms of providing an approach to the measurement of effectiveness.

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