Turkish Lira has started to drop again

The Turkish Lira fell 5 per cent on Thursday, extending a four-day slide and eating into big gains last week.

The currency has shed as much as 20 per cent in four trading sessions. That reversed a more than 50 per cent rally over the previous five days, which was triggered by a new state scheme to protect lira deposits from depreciation losses versus hard currencies.

The lira dipped as far as 13.4 to the dollar and edged back to 13 by 0718 GMT. It has swung from 18.4 to 10.25 in the last two weeks, a dizzying ride for Turks who have seen their household budgets upended and savings depleted.

The fast-moving currency crisis was set off by a series of aggressive interest rate cuts beginning in September.

Finance Minister Nureddin Nebati said late on Wednesday the record volatility was not worrying.

He also said there were no state interventions to sell dollars and boost the lira last week.

Under the scheme unveiled by Erdogan, the Treasury or central bank would cover the difference between deposit rates and the FX rate for lira converted into the new instrument, which is meant to reverse a tide of dollarization.

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