Turkish President Erdogan said the country's move to bring exchange rates to a level that reflects local realities reached its purpose as dollar/lira exchange rate dropped to 12.35.

Turkiye's President Erdogan stressed the new steps will protect lira investments and boost confidence in the currency.
Turkiye's President Erdogan stressed the new steps will protect lira investments and boost confidence in the currency. (Reuters)

President Recep Tayyip Erdogan said that Turkiye has thwarted speculative financial games from foreign and domestic forces, after the lira rebounded strongly from record lows in volatile trade this week.

Speaking to his AK Party lawmakers on Wednesday, Erdogan said a scheme he announced on Monday to protect lira deposits succeeded in reaching its goal.

“The winner here is not only those who have money in the bank or the exporter; this is for the entire country, each and every one of our 84 million citizens,” Erdogan said. 

Erdogan stressed that the new steps will protect lira investments and boost confidence in the Turkish currency.

“Our move to bring exchange rates to a level that reflects the realities of Turkiye, within the rules of the free market economy, has achieved its purpose,” he said.

“We want to ensure that the free market operates by its own rules by eliminating malicious speculators from our country.”

The lira/dollar exchange rate dropped to 12.35 by 11.00 am (0800GMT) on Wednesday morning, a gain of almost 40 percent since Monday evening.

Earlier, Treasury and Finance Minister Nureddin Nebati had said the Turkish lira has moved towards a level where it will find its true balance, a day after the lira gained strength against the US dollar. 

READ MORE: Turkish lira rebounds after introduction of new economic tool

Plan to shore up support for currency

According to the new economic model, Turkiye will compensate lira depositors for foreign currency fluctuations while encouraging citizens to move towards lira-based assets.

Under the facility, if the yield remains below the exchange rate difference between the account opening and its maturity dates despite the earned interest, the Treasury will compensate the depositor. 

The new FX-protected Turkish lira deposits tool will be available for individuals who have a lira deposit account with a maturity of three, six, nine, or 12 months.

Turkiye's economy posted growth in 2020 despite coronavirus-related lockdowns throughout the world, Nebati added, noting that he expects the economy to post a double-digit growth figure this year.

The minister also said the government will simplify the value-added tax and expedite the tax return process.

READ MORE: Lira makes gains after Erdogan declares plans to support currency

Source: TRTWorld and agencies