The pound, which had plunged more than 10% and its exchange rate against the dollar had reached 18,4 earlier, then strengthened by 10,8%. The exchange rate was at 12 pounds per dollar and then rose to 13,4 per dollar.
The pound has recovered sharply from an all-time low following measures announced by Turkish President Recep Tayyip Erdogan, who has insisted he will continue his policy of low interest rates.
The pound, which had plunged more than 10% and its exchange rate against the dollar had reached 18,4 earlier, then strengthened by 10,8%. The exchange rate was at 12 pounds per dollar and then rose to 13,4 per dollar.
After the cabinet meeting, Erdogan said the new measures would ensure that citizens would not have to convert their pounds into foreign currency, while their deposits would be guaranteed. "We are presenting a new economic alternative to citizens who want to alleviate their concerns about their savings by raising the exchange rate," he said, adding that "as interest rates fall, we will all see inflation fall in a few months." .
"This country will no longer be a paradise for those who want to raise their money at high interest rates, it will not be a haven for imports," he added.
The Turkish president called on those "who have the money and access to finance" to contribute to the investment and pledged to support exporters and retirees.
"Today's move is based solely on the Turkish government 's announcement that it will protect (citizens) against exchange rate fluctuations," said John Doyle, vice president of trading and investment at Tempus Inc. "The most important thing is that the government says that it will compensate for the losses in the deposits in pounds if the fall of the pound exceeds the bank interest rates. "The government has not told us exactly how it will implement this plan."
SOURCE: RES-EBA