AGL 40.00 No Change ▼ 0.00 (0%)
AIRLINK 129.06 Decreased By ▼ -0.47 (-0.36%)
BOP 6.75 Increased By ▲ 0.07 (1.05%)
CNERGY 4.49 Decreased By ▼ -0.14 (-3.02%)
DCL 8.55 Decreased By ▼ -0.39 (-4.36%)
DFML 40.82 Decreased By ▼ -0.87 (-2.09%)
DGKC 80.96 Decreased By ▼ -2.81 (-3.35%)
FCCL 32.77 No Change ▼ 0.00 (0%)
FFBL 74.43 Decreased By ▼ -1.04 (-1.38%)
FFL 11.74 Increased By ▲ 0.27 (2.35%)
HUBC 109.58 Decreased By ▼ -0.97 (-0.88%)
HUMNL 13.75 Decreased By ▼ -0.81 (-5.56%)
KEL 5.31 Decreased By ▼ -0.08 (-1.48%)
KOSM 7.72 Decreased By ▼ -0.68 (-8.1%)
MLCF 38.60 Decreased By ▼ -1.19 (-2.99%)
NBP 63.51 Increased By ▲ 3.22 (5.34%)
OGDC 194.69 Decreased By ▼ -4.97 (-2.49%)
PAEL 25.71 Decreased By ▼ -0.94 (-3.53%)
PIBTL 7.39 Decreased By ▼ -0.27 (-3.52%)
PPL 155.45 Decreased By ▼ -2.47 (-1.56%)
PRL 25.79 Decreased By ▼ -0.94 (-3.52%)
PTC 17.50 Decreased By ▼ -0.96 (-5.2%)
SEARL 78.65 Decreased By ▼ -3.79 (-4.6%)
TELE 7.86 Decreased By ▼ -0.45 (-5.42%)
TOMCL 33.73 Decreased By ▼ -0.78 (-2.26%)
TPLP 8.40 Decreased By ▼ -0.66 (-7.28%)
TREET 16.27 Decreased By ▼ -1.20 (-6.87%)
TRG 58.22 Decreased By ▼ -3.10 (-5.06%)
UNITY 27.49 Increased By ▲ 0.06 (0.22%)
WTL 1.39 Increased By ▲ 0.01 (0.72%)
BR100 10,445 Increased By 38.5 (0.37%)
BR30 31,189 Decreased By -523.9 (-1.65%)
KSE100 97,798 Increased By 469.8 (0.48%)
KSE30 30,481 Increased By 288.3 (0.95%)

ANKARA: Turkey's lira steadied on Wednesday and held gains from what is so far its best week two decades, after the currency charged back from record lows due to President Tayyip Erdogan's new steps to guard Turks' savings against such volatility.

The lira stood at 12.25 to the dollar at 0539 GMT, from a close of 12.4 on Tuesday when it rose 6% in a roller-coaster session.

On Monday - when the president announced the plan to protect lira deposits from further depreciation - the lira first crashed 10% then rallied to its largest daily gain ever, in record volatility.

The currency is still down some 40% this year following a meltdown prompted by an aggressive monetary easing cycle engineered by Erdogan. At its low on Monday, the currency was down some 60% on the year.

Turkish lira charges back after Erdogan's anti-dollarization plan

More than half of locals' savings are in foreign currencies and gold, according to central bank data, with confidence in the lira eroding after years of depreciation and bruised central bank credibility.

Erdogan introduced a series of measures on Monday that would shift the burden of a weakened currency to the Treasury and encourage Turks to hold lira rather than dollars.

Analysts and bankers warned that if the nascent lira rally reverses and forces the government to cover depositors' losses, it could further stoke inflation and weigh heavily on the deficit.

Wall Street bank JPMorgan estimated that any extra 12% lira depreciation over the deposit interest rate could increase the budget deficit by around 1% of GDP over a six month horizon.

Stepping in the share the burden, the central bank said on Tuesday it will support the conversion of foreign currency deposit accounts into lira to further encourage reverse dollarization.

Under pressure from Erdogan, the central bank has cut interest rates by 500 basis points since September. The president has pledged to continue with his low-rates policy.

While the government hailed the lira's rebound on Monday as a major policy win, economists have widely said Erdogan's low-rates model is reckless and they expect inflation, currently above 21%, to blow through 30% next year.

Comments

Comments are closed.