ISTANBUL: The lira firmed 1% against the dollar on Wednesday, rebounding from a record low after Turkey unveiled an optimistic medium-term economic programme and also reduced taxes on forex transactions and bank deposits.
The rebound, even as the greenback firmed too, outweighed concerns over a fourth day of deadly clashes between Turkey’s ally Azerbaijan and Armenia. The risk of European Union sanctions have also recently weighed on the lira.
After touching a record low of 7.8555 on Tuesday, the lira firmed to 7.7255 from a close of 7.8040. It was on track for its best session against the dollar since mid-August.
The currency has weakened 23% so far this year primarily due to unease over depleted forex reserves, costly state interventions in FX markets, and negative real interest rates.
The Istanbul stock exchange also surged with its bluechip BIST 100 index up more than 2%, while the banking index gained 3%. Turks have invested in stocks this year like never before, filling a gap left by foreigners.
“We can say that the general macro path traced by the YEP(new economic programme) was market friendly,” a treasury trader at one bank said, while questioning whether some of the economic forecasts in it were achievable.
“When we look at the general lines, it appears they are aiming at a process which will again increase the weight of foreign investors in Turkey’s markets,” he said.—
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