The Turkish lira fell in light of doubts about the viability of the monetary security mechanism

The Turkish lira ended its five-day rally on Monday, returning to a slump against the dollar, violating the Turkish government’s guarantee that the lira will now remain two paise more stable after introducing a new mechanism aimed at supporting the lira last week.

According to the Bloomberg News Agency, the lira traded down 6% today at 11,3399 lira against the dollar in the afternoon trade, down 7% from 11.5162 lira against the dollar at 9:17 am. Istanbul Time.

With its decline today, the Turkish currency has lost more than 34% of its value since the beginning of this year, becoming the most declining currency among emerging economies in 2021.

The lira fell today after Turkish President Recep Tayyip Erdogan’s statements last Friday about the “gradual” stabilization of the lira, including a guarantee of deposits in the local currency against exchange rate fluctuations, following measures announced by the government last week in support of the currency.

The Turkish lira has recorded a significant recovery in recent days, amid growing sentiment supported by the government’s announcement of a new tool to protect Turkish lira depositors from exchange rate fluctuations.

The new Turkish financial instrument allows depositors to realize the same level of potential profit as saving in foreign currencies by holding assets in the Turkish lira.

At the same time, data from the Turkish Central Bank indicates that Turkish authorities have intervened in exchange markets to contain the fall in the lira, which led to a 54% appreciation against the dollar last week, recovering its losses. 15% in the previous week.

For his part, Ibrahim Aksoy, chief economist at HSBC Holdings, a British bank based in Istanbul, told the bank’s customers that the dollar would rise again if the Turkish central bank’s potential foreign exchange sales fell.

Official data released by the Central Bank of Turkey today, Monday, showed a high rate of utilization of production facilities capacity for manufacturing industries on a monthly basis.

According to the Turkish Anatolian Agency, the bank’s data rose 0.6 percent to 78.6 percent this month from November.

In detail, the largest growth in the rate of utilization of productivity was for intermediate goods, which reached 80.3 per cent, while consumer goods were at a low level of 73.3 per cent.

It should be noted that the data are based on the responses received by the bank from the local production units for the survey of business trends.