usually"d to five or six decimal places. Turkeys debts though dont settle in gold. The lira can run even if the dollars raised by selling longer-dated bonds cannot.) And the central bank lets the banks meet their reserve requirement in lira by posting foreign exchange or gold at the central bank (so gold deposits in effect fund lira lending. This reduces rounding issues and the need to use excessive numbers of decimal places. 27 Therefore, the total RER misalignment is given by the extent to which economic fundamentals differ from their long-run sustainable levels.
A currency becomes more valuable whenever demand for it is greater than the available supply. Their flows go into the capital account item of the balance of payments, thus balancing the deficit in the current account. We strip it down and build it back up to be the perfect SXS for you. There are some exceptions to this rule: for example, the Japanese often" their currency as the base to other currencies. So long as the domestic hard currency deposits dont run, the banks ultimate funding need is in lira. Most of the gold, and a decent chunk of the foreign exchange, is effectively borrowed. It helps that domestic depositors tend to switch out of lira and into domestic foreign currency deposits in periods of stress.