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Turkish lira rebounds after steep losses, government responses
THE Turkish lira on Monday clawed back about half of its steep losses from Friday, its worst day since the currency crisis took hold in August, after the central bank and government issued a series of promises and warnings to stem any further weakness.
The central bank vowed on Monday to use all its instruments to maintain price stability, a day after President Tayyip Erdogan warned those in the financial sector who buy foreign currencies expecting the lira will fall will pay "a very heavy price".
The lira's slide against the US dollar at the end of last week raised concerns that Turks were buying more foreign cash as ties with Washington deteriorated, a potentially bad omen for an economy that tipped into recession after last year's full blown currency crisis.
The lira had weakened to as much as 5.8490 against the US currency on Friday before rebounding to close at 5.7625, still its worst close since October. At 0550 GMT Monday, it stood at 5.61 against the US dollar, some 2.5 per cent stronger than Friday's close.
As the lira tumbled on Friday, the central bank tightened a policy lever. A day later, Turkey's banking and market regulators said they had launched investigations into complaints that a JPMorgan report had caused speculation in the Istanbul bourse and hurt the reputation of banks.
Istanbul's main BIST 100 share index dropped 3.45 per cent on Friday, while the banking index declined 6.64 per cent.
Speaking at a local election rally in Istanbul on Sunday, Mr Erdogan said "some people" had begun provoking Turkey and that they were attempting to make the lira decline against foreign currencies with their cooperators in Turkey. "I am calling on those who engage in such activities on the eve of elections, we know all of your identities. We know what all of you are doing. Know this, after the elections, we will present you with a heavy bill," he said.
Turks go to polls on March 31 for local elections. Central bank data showed on Thursday that forex deposits and funds including precious metals held by Turkish locals hit a record high in the week to March 15, which economists said signalled a fall in confidence in the lira. REUTERS