ISTANBUL: Turkey’s lira briefly rallied as much as 3% on Monday afternoon, reversing an early plunge and continuing a volatile pattern in recent weeks after data showed inflation soared to a 19-year high beyond 36% last month.

With moves exaggerated by low volumes, the lira had weakened as much as 5% in morning trade, sustaining a slide in 2021 which saw the currency suffer its worst year since President Tayyip Erdogan came to power nearly two decades ago.

The currency stood at 13.1 against the dollar at 1200 GMT, 0.7% stronger on the day, after oscillating in a wide range between 12.77 and 13.92. It touched a record low 18.4 just two weeks ago.

While investors are concerned about the central bank’s recent slashing of interest rates despite surging inflation, there was little market reaction to official data showing much higher-than-expected December price rises.

Consumer prices surged 36.08% year-on-year, far outstripping a Reuters poll forecast of 30.6%, driven by rises in transport, and food and drinks.

The lira was by far the worst performer in emerging markets in 2021, as well as in the last few years, and lost 44% of its value against the US currency over the year. It weakened 19% last week alone.

The central bank has slashed its policy rate by 500 basis points since September, under pressure from Erdogan as he pushed a “new economic programme” focused on credit and exports despite the lira’s collapse and rising inflation.

To curb the lira weakness, Erdogan unveiled a scheme three weeks ago in which the state protects converted local deposits from losses versus hard currencies, sparking a sharp 50% rally in the lira with support from the central bank. But the lira then sank again last week, prompting a call on Friday from Erdogan - whose opinion poll ratings are sliding ahead of an election in 2023 - for Turks to keep all their savings in lira and shift gold into banks.