Turkey makes fresh attempt to boost struggling lira
Turkey has cut tax levels on lira bank deposits today in an attempt to boost the weakened currency.
Withholding tax on lira savings of more than a year will be cut from 10 per cent to zero, while tax on deposits of less than a year will be cut to three per cent from 12 per cent.
Read more: Lira continues decline, dragging down other emerging currencies
Tax on foreign currency savings of up to year has increased from 15 to 16 per cent, the country's Official Gazette said.
The value of the currency tumbled yesterday on the news that central bank deputy governor Erkan Kilimci has resigned ahead of a vote on interest rates next month. The currency is at 6.56 against the dollar this morning.
FXTM research analyst Lukman Otunuga said: "Although the Lira stabilised against the Dollar this morning, gains may be capped by concerns over double-digit inflation, a deepening account deficit, and looming US sanctions.
"Emerging market currencies are likely to remain pressured by the economic turmoil in Argentina and Turkey, while external factors ranging from global trade tensions and prospects of higher rates could intensify the pain."
Kilimci's replacement will be chosen by Turkish President Recep Yayyip Erdogan, who has pressured the bank not to increase interest rates despite the weakening of the currency.
Erdogan said today that the lira was being targeted in an operation but that the volatility will pass, Reuters reported.
Speaking at a military graduation, he said the country was starting to see results from its measures to stop the lira slide.
Sanctions imposed by the US over Turkey's detention of evangelical Christian pastor Andrew Brunson have put pressure on the economy, and critics have accused Erdogan of exacerbating the crisis, claiming he has too much influence over the central bank.
Read more: Turkish lira slumps further after banks downgraded