The Turkish lira firmed 1.6% on Tuesday, rebounding off lows last touched in September 2018, after the local central bank and the U.S Federal Reserve doubled down on efforts to provide cheap funding in the face of the coronavirus spread.
The lira stood at 6.4585 against the dollar by 1430 GMT, having firmed as far as 6.4435 from a close of 6.5600. The currency - still fragile from a crisis in 2018 - shed some 8% so far this year.
On Tuesday, in one of its most aggressive steps to support markets and the economy, Turkey's central bank opened a 90-day repo auction with a volume of 15 billion lira and an interest rate of 8.25% - 150 basis points below its policy rate.
Istanbul's main stock index rallied 6.2% while banking index surged 8%.
The compound yield on the benchmark 10-year bond fell to 13.26% on Tuesday from 13.66% on Monday.
The bank last week cut its policy interest rate by a sharp 100 points to 9.75%. It has also slashed reserve requirements and eased the terms of borrowing to flood the financial sector with cheap lira liquidity.
"Banks have been offered targeted additional liquidity facilities to secure uninterrupted credit flow to the corporate sector," the bank said.
According to the minutes of last week's policy meeting, released on Tuesday, Turkey's central bankers believe the pandemic has begun hitting trade, tourism and domestic demand and they are closely watching its effects on financial markets and jobs.
They said it was critically important that broad monetary and fiscal policies are complemented with support for sectors and people most affected by the outbreak.
The Fed on Monday promised unlimited dollar funding across the US economy in its latest move to stem the economic damage from the pandemic that has left many countries locked down, setting the stage for a sharp global recession.
Turkey's economy, having just recovered from recession, is expected to slow significantly through mid-year now that most Turks are homebound and infections have surged over the last two weeks.