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ANKARA: The Turkish lira fell again on Friday morning after recovering from a slide of as much as 5% a day earlier, when investors sought safe havens after Russian forces invaded Ukraine.

The lira weakened 0.6% to 14.07 against the dollar by 0747 GMT. On Thursday, it slid as far as 14.62 - its weakest level since a currency crisis in late December - before staging a recovery and ending 1% weaker.

Until Thursday’s slide, the lira had stabilised over the past two months, supported by a scheme that protects lira deposits against depreciation and costly currency market interventions from the central bank.

Bankers said they thought the central bank continued to play an active role in the forex market this week, but this is not yet apparent from preliminary data. According to estimates by two traders, some $1 billion to $4 billion of the bank’s reserves may have been used this week to limit lira losses.

“Turkey experienced the first test of its new exchange rate policy this week,” said a forex trader at one bank. “The lira at one point yesterday lost more value than the currencies of the countries involved in the war and this shows how risky an exchange rate policy we are following.”

Ukrainian President Volodymyr Zelenskiy vowed on Friday to stay in Kyiv as his troops battled Russian invaders advancing toward the capital in the biggest attack on a European state since World War Two.

President Tayyip Erdogan has forged good ties with both Russia and Ukraine, leaving Ankara in a difficult position as the conflict deepens. He has said Turkey backs Ukraine’s territorial integrity and is “sincerely saddened” by Russia’s invasion.

Economists have said Turkey may see a drop in tourism and export income this year from Russia and Ukraine, two countries that account for a significant portion of its visitors.

The Treasury said on Thursday it would take the necessary measures against the economic impact of the conflict, and called on Turks to maintain confidence in the lira.

Last year the currency lost 44% of its value to the dollar, mostly sparked by a series of unorthodox central bank rate cuts sought by Erdogan. This stoked inflation, which neared 50% in January and is expected to rise further in coming months.

Istanbul’s main BIST 100 stock index, which tumbled 8.2% on Thursday, was 1% higher on Friday.

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