Turkish Lira rebounds against foreign currencies after Erdogan’s speech on Monday night

Just yesterday the Turkish Lira reached a new low record of 18 Lira to the Dollar and by night it gained more ground against the Dollar going up as much as 13.15 against the Dollar after President Tayyip Erdogan, unveiled a plan he said would guarantee local currency deposits against market fluctuations.

By Tuesday morning, the Turkish Lira gained more steam and was up 7% to follow Monday's night historic 25% recovery from record lows.

The currency dipped then strengthened in volatile trade to 12.21 versus the dollar on Tuesday morning after closing at 13.15 on Monday.

In a late Monday speech, Erdogan said the series of steps will ease burdens from a currency crash over the last few weeks and encourage Turks to hold lira savings rather than dollars.

He did not detail how the government would fund the potentially expensive and inflationary initiative.

Before the announcement, the lira was down more than 10% at an all-time low of 18.4 against the U.S. dollar. Afterward it shot back to as far as 12 – its biggest intra-day rally on record – and ended the day up 25%.

Some $1 billion was sold in markets after his announcement, the head of the Turkish Banks Association said. According to the calculations of three bankers, around $1-1.5 billion in savings were converted to lira on Monday night.

The lira has plunged to record lows this year over fears of an inflationary spiral losing some 40% of its value in the past month alone. At its low it was down some 60% on the year.

The rapid rebound was triggered by the deposit guarantee promise that Erdogan said would dissuade Turks from converting savings to hard currencies.

“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 after a cabinet meeting, while repeating his defence of a low-rates policy that initially caused the lira’s slide.

While the government has called the lira’s recovery a major win, economists said inflation – currently above 21% – would blow through 30% next year.

The central bank has cut rates by 500 basis points since September.

No comments

Thanks for viewing, your comments are appreciated.

Disclaimer: Comments on this blog are NOT posted by Olomoinfo, Readers are SOLELY responsible for their comments.

Need to contact us for gossips, news reports, adverts or anything?
Email us on; olomoinfo@gmail.com

Powered by Blogger.