Abstract:These measures do not seem to solve the fundamental problems leading to high inflation and currency depreciation.
After Turkish President Recep Tayyip Erdogan announced a plan to support lira, lira experienced a violent shock and rebounded rapidly from a record low.
Erdogan outlined the steps to guarantee lira savings in his speech, saying that if the value of lira relative to other currencies is lower than the interest rate set by the bank, the government will intervene to make up for the loss of lira deposits. The details of the president's plan remain to be seen, and analysts are skeptical.
Goldman Sachs analysis said that the recent trend is obviously very important, but it is worth noting that lira has only recovered the land lost in the past two weeks, and the depreciation rate so far this year is still very large. These measures do not seem to solve the fundamental problems leading to high inflation and currency depreciation.
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