There was no intervention and Turkey’s public banks or institutions did not sell any United States dollars on the night of Dec. 20, when a new economic model was announced and the lira recorded a massive rebound, the country’s treasury and finance minister said Monday.
“There were no interventions that night, neither from public banks or anyone else,” Nureddin Nebati told a televised interview to broadcaster A Haber.
“Individuals raced that night to sell their dollars, thanks to the confidence created by our President Recep Tayyip Erdoğan,” Nebati noted.
The lira surged some 50% last week after the announcement of a lira deposits protection plan. Some media reports had claimed the increase was also supported by billions of dollars of state-backed market interventions. Nebati rebuffed the claims.
Erdoğan unveiled last week a scheme under which the Treasury and the Central Bank of the Republic of Turkey (CBRT) would reimburse losses on converted lira deposits against foreign currencies, sparking the lira’s biggest intraday rally.
Last week’s rally brought the Turkish currency back to mid-November levels.Last Monday, it had fallen to an all-time low of 18.4 per U.S. dollar.
In an interview with A Haber on Friday, Erdoğan said Turks showed confidence in the local currency, and deposits increased by TL 23.8 billion after the anti-dollarization plan announcement.
He said the government had burst a bubble in the foreign exchange market by taking steps to protect lira deposits against volatility.