ISTANBUL: The Turkish lira rallied as much as 6% against the dollar on Monday after Turkey moved to restrict lira lending to many companies with more than $1 million in foreign currency cash in the latest step to reverse a slide in the currency.

The lira stood at 16.099, as of 0531 GMT, having strengthened as far as 16.03 from a close of 16.99 on Friday.

After most local markets had closed for the week on Friday, the BDDK banking watchdog said if companies had more than 15 million lira ($908,000) of forex cash assets, and they exceed 10% of total assets or annual revenues, they will not be allowed to receive new lira loans.

Analysts had forecast that the step would boost the lira as it could force many large- and medium-sized companies to convert forex assets to lira in order to maintain access to credit.

The new rule was the latest in a raft of government and central bank measures since a historic currency crash in December sent inflation soaring.

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The BDDK said the move would strengthen financial stability.

The lira tumbled 44% against the dollar last year in the wake of a series of interest rate cuts despite surging inflation, which stood at 73.5% in May.

This year, it is still 18% weaker after Monday’s early moves.

Concerns over policy, depleted official reserves, a rising current account deficit and some investor and saver fears of capital controls remain sources of pressure on the lira.