Turkish lira rallies on Erdogan plan
The Turkish lira has rebounded from historic lows after President Recep Tayyip Erdogan announced a number of steps aimed at easing the burden of the weakened currency on the population.
On Tuesday, the lira strengthened by more than 10% to trade around 12 lira versus the US currency, after gaining 23% on Monday, and recovering from a record low of nearly 18.4 per dollar touched earlier in the day. The currency’s gains have extended to more than 40% since Friday, but the lira remains down 45% for the year.
The two-day rally is reportedly the biggest since 1983. The surge came after the country’s authorities revealed a series of measures to protect savings from the wild fluctuations of the lira. The Erdogan-led government has vowed to press on with its low-rates policy, which triggered the latest slide in the national currency.
The measures would ensure citizens would not have to convert their lira into foreign currency because of lira volatility, including a deposit guarantee promise, according to President Erdogan.
“We are presenting a new financial alternative to citizens who want to alleviate their concerns stemming from the rise in exchange rates when they evaluate their savings,” he said, speaking after a cabinet meeting.
The president said he expected inflation to start falling within months with the help of the interest rate cuts.
“This country will no longer be a heaven for those adding to their money with high interest rates, it will not be an import haven,” he added.
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