Turkey's currency made significant gains Tuesday after President Recep Tayyip Erdogan announced extraordinary measures that aim to safeguard deposits in the lira against volatility seen in recent weeks and boost confidence among Turks as they have watched their buying power erode.
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The Turkish lira hit an all-time low of 18.36 against the US dollar Monday, meaning it had lost more than 60% of its value against the American currency this year. But it made overnight gains after Erdogan's announcement, rebounding to a high of 11.09 Tuesday and later trading at 13.01.
The currency has been on a rollercoaster ride since the country's Central Bank began lowering interest rates in September, with the lira hitting record lows as Erdogan dug in on the rate-cutting policy despite soaring inflation.
The weakened lira drove consumer prices higher, making imports, fuel and everyday items more expensive and leaving many people in the country of more than 84 million struggling to buy food and other basics. Many flocked to foreign currencies and gold to hold on to their savings.
In response, Erdogan said Monday that the government would cover losses by lira deposit holders in cases where the lira's depreciation against foreign currencies exceeds bank interest rates.
