ANKARA (Reuters] – Turkish lira bank accounts have been protected from depreciation during a currency crisis, President Tayyip Turkey said Wednesday. The lira stabilised following a volatile rebound after record lows.

After strengthening on Tuesday, the lira fell 1.2% to 12.55 against the dollar at 1000 GMT. However, the currency has still fallen about 40% this year due to aggressive monetary easing by the President.

After the president declared Monday that he would protect Lira deposits against further depreciation of the currency, initially it plummeted to 18.40 per dollar. Then it rallied in volatile trading.

Erdogan’s latest measures transfer the currency crisis burden to Treasury. This encourages Turks to save lira and not dollars.

Erdogan spoke to lawmakers of his ruling AK Party to say that his programme to reduce the foreign exchange rate has succeeded. He also defended his call for lower interest rates.

Some people made statements yesterday that said “now is the best time to purchase forex. This (currency crash), will continue where it left off.” “Their brains are now watered down,” said he.

According to data from central banks, more than half of Turks’ savings are held in foreign currencies or gold. This is despite the fact that confidence in the Turkish lira has been eroded by years of depreciation, and weakened central bank credibility.

Bankers and analysts said that if the rally in the lire reversed, forcing the government to compensate depositors’ losses it would increase inflation and add weight to the deficit.