After President Recep Tayyip Erdogan revealed a new plan designed to strengthen the currency, the Turkish lira has enjoyed a second day of strong gains.
It increased by as much as 15% in Tuesday trade after jumping by as much as 25% on Monday. Mr Erdogan promised to repay savers for currency changes that have undermined the value of lira-denominated bank savings.
The currency had plummeted to new lows as the country’s cost of living increased by 21.7 percent. However, it rose to little over 11 to the dollar at one point on Tuesday before sliding back slightly.
It cut borrowing charges from 15% to 14% on Thursday last week. It was the company’s fourth layoff in as many months.
Central banks often increase interest rates to combat rising prices, but Mr Erdogan has anointed such weapons “the mother and father of all evil.”
More downward interest rates, as per to the president and his allies, increase Turkish exports, investment, and employment.
The government has agreed to compensate the difference between the value of lira savings and corresponding dollar deposits under the most recent measure.
“We’re giving a new financial option to residents who want to assuage their fears about rising exchange rates while evaluating their savings,” stated the president.
“We will all witness how inflation begins to reduce within months as interest rates are cut,” he continued.
“This country will no longer be a shelter for individuals who want to compound their money with high interest, and it will no longer be an import haven.”
As per central bank statistics, the lira is so distrusted that more than half of Turkey’s savings are held in different exchange and gold.