The Central Bank of the Republic of Turkey (CBRT) has the authority and responsibility to intervene in exchange rates, Deputy Prime Minister Ali Babacan said yesterday. The CBRT follows the development of the rate of exchange of the lira within the framework of controlling price stability, and it intervenes if necessary, Babacan, who is responsible for the economy, said in an interview with Turkish State Television (TRT). Babacan's remarks came after the dollar jumped to a record high against the lira – over 2.5 – on Wednesday.Babacan said that the international financial markets are passing through a period of very high volatility and the international economic context should be taken into consideration in the assessment of the rise of the dollar against the lira. Falling oil prices and the drop in the euro against the dollar were two examples Babacan cited. "So, the dollar went much higher against the euro. In fact, the dollar appreciated against many currencies in the world during that period. Therefore, volatility is very high." Much of the economic volatility that Turkey is experiencing can be attributed to the high level of volatility in international markets, Babacan stressed.Interest rates are a controversial topic in Turkey as government officials have repeatedly criticized the CBRT's tight policies as limiting economic growth. Babacan said that the government did not have an exchange rate target."When the lira depreciated, or the dollar or the euro rises, this is partially reflected in inflation. The first priority of the central bank is price stability; that is the fight against inflation. The first priority of a central bank is defined by this. It is not possible for a central bank to say the exchange rate is of no concern. Therefore, the bank is following the exchange movements closely and intervening if needed," Babacan said. "If you ask every minister in the government, 'What is the exchange rate you prefer?' you will get a different answer from each one. Normally, none of them needs to say anything because the government does not have a formally pronounced exchange rate target. The final assessment is done by the Central Bank Monetary Policy Committee after listening to everyone," he explained."We do not believe that there should be a daily debate on exchange rates. Any country in which the rate is part of daily political polemics is ultimately harmed; there is a rising risk premium because there is no stability in terms of interest rates … We believe that it is important that all communication about exchange rates be made from a single channel, from the central bank, which has the authority and responsibility for it," he said.