UPDATE 1-BBVA's CEO says main risk in Turkey is forex, cenbank chief sacking not affecting operations

(Adds quotes, details)

MADRID, March 23 (Reuters) - The main risk in Turkey is forex, and BBVA is prepared to handle that, the Spanish bank’s chief executive Onur Genc said on Tuesday, adding that it was invested in Turkey for the long term and the dismissal of the central bank chief would not affect that.

The sacking of central banker Naci Agbal, appointed less than five months ago, has sparked fears of a reversal of recent rate hikes and increased market volatility.

Shares in BBVA, which makes around 14% of its profits in Turkey through its 49.9%-owned Turkish unit Garanti, lost 7.7% on Monday after the central bank’s chief sacking and were up 0.6% in early morning trade on Tuesday.

“The main risk that we see is foreign currencies. And that is the risk that we are managing. Turkey is an emerging market. We are prepared for that risk,” Genc told a banking conference.

BBVA has already been actively hedging on the foreign exchange markets to protect its earnings and capital from any potential headwind from Turkey.

“We lend in euros and in dollars. We have reduced our loan book in the last few years. Why? Because we are lending in a country where we are not safe with the currency. We are managing that risk. That risk of living on foreign exchange. We are talking about leveraging debt at 60 per cent.”

Asked if the firing of the central banker would affect BBVA’s operations in Turkey, Genc answered: “No. The simple answer is no.”

“When we look at Turkey, we find a very large demographic. We are talking about very young demographics. In other words, there’s a lot of long-term characteristics that give us peace of mind.”

Turkish stocks cratered again on Tuesday and the lira took a brief dive as investors, banks and local depositors sought to predict whether the central bank was on the verge of cutting interest rates after the weekend’s leadership overhaul. (Reporting by Inti Landauro and Anita Kobylinska Writing by Ingrid Melander)