Lira bounces back after Erdogan's new measures


Turkey's lira bounced dramatically from its session low late Monday as President Tayyip Erdogan announced a number of measures aimed at easing the burden of the weaker currency on Turks, but promising to stick to the low-rates policy that caused the lira's fall in the first place.

The lira, that was down more than 10% against the dollar earlier in the day, rallied dramatically and was up 10.8 percent on the day as a result of Erdogan's remarks. It recently traded at 13.400 per dollar, having fallen as low as 12 per dollar in its widest daily trading range on record.

Following a Cabinet meeting, Erdogan stated that the steps, including a deposit guarantee commitment, would ensure that citizens would not have to change their lira into foreign currency as a result of the lira crisis.

"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," Erdogan said.

Erdogan also urged "everyone with money and access to finance" to contribute to investments, and vowed to help exporters and retirees.

According to Ipek Ozkardeskaya, senior economist at Swissquote Bank, the present economic outlook is like "a vehicle with no brakes," and Erdogan's freshly announced initiatives deviate greatly from market norms.

Amidst widespread criticism and the swift economic impact, including Turks' rapidly dwindling earnings and savings, Erdogan has pressed through with his economic plan, which promotes exports and loans.

Even with today's dramatic advances, the lira has lost about half its value against the dollar this year and has been by far the poorest performer among peers for three years in a row, economists say, owing mostly to weakened monetary credibility.

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