The Turkish lira rose sharply at the beginning of Tuesday, continuing yesterday's rally, which was facilitated by the plan of President Tayyip Erdogan, who, in his opinion, guarantees the protection of deposits in the lira from market fluctuations.
Currently, the USD/TRYis trading with a decrease of 4,9%, at 12.57. At the beginning of trading, the pair reached a low at 11.09.
Last night, Erdogan announced a number of measures that should ease the burden of the collapse of the lira for Turks and encourage them to keep their savings in lira, not in the US currency. After the government's promise to pay the difference between the amount of savings in lira and equivalent dollar deposits, the lira rose by about 25% against the US dollar, which was a record session increase.
The head of the Association of Turkish Banks (TBB), said that the country's Treasury will cover the costs of measures that could potentially be an expensive and inflationary initiative.
Yesterday, before the rally, the lira reached record lows, having lost about 60% of its value against the US dollar since the beginning of the year, due to concerns about an inflationary spiral amid Erdogan's commitment to lower interest rates.
Meanwhile, some economists said that the latest government measures represent a "hidden" increase in interest rates, which may not stop the fall of the lira, but at the same time creates a burden on the Treasury.