Turkish Lira wraps strongest-week ever with lofty gains on Erdogan Govt. aid

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Turkish Lira wraps strongest-week ever with lofty gains on Erdogan Govt. aid

Turkish Lira, the beleaguered Turk currency which had been grappling with an extraordinary scale of build-up in price pressures with the country’s key inflation indicator soaring as much as 20 per cent thus far this year, had recorded its strongest-ever weekly percentage gain on Friday, surging more than a whacking 50 per cent against its American counterpart following billions of dollars in aids from Erdogan Government through backdoor dollar sales by a number of State-owned lenders.

Aside from an unprecedented extent of FX market intervention, the Turkish Government of President Tayyip Erdogan also had pledged that it would capitalize on certain depository assets to cover up the FX losses which were required to recoup Lira from the brink of an imminent collapse.

As of November 2021, the Turkish Central Bank had a gross foreign currency reserve worth of $129 billion alongside a $61 billion received from the bank’s swap deal, while the Central Bank held an approximated $29 billion worth of gold in reserves, totalling the tally to a whopping $219 billion in FX reserves which happened to be the world’s 12th-largest including gold.

Turkish Lira leaps 50% on the week amid extraordinary Govt intervention

On top of that, according to official data, common Turk traders did not sell off any dollars earlier in the week, suggesting they had little or no roles in latest boost in Turk currency, while a perspicacious bunch of analysts were quoted saying that the sharpest-ever weekly gain in Turkish Lira last week had costed the Erdogan Government more than a $8 billion in fresh liquidities.

Lira had been tottered to an all-time low of 18.4 against the greenback on Monday, though, late in the day, an unyielding Turkish President Tayyip Erdogan who had committed to a mass-scale rate-cut to downsize the economy’s inflation indicators, had unenveloped a scheme according to which the Treasury Department alongside Central Bank would recoup losses on Lira by selling off reserve Dollars.

Followed by the Erdogan statement, Lira had witnessed its largest intra-session rally ever as investors’ confidence had rekindled sharply, while Erdogan was quoted saying in an interview with broadcaster AHaber that the common Turks had shown an utter resilience and Lira Deposits rose to 23.8 billion following the anti-dollarization move.

Lira closed at 10.7 against its American peer on Friday following five straight session of gains, soaring over an eye-popping 50 per cent over the week while hitting a level never seen since mid-November.