Jonathan Spicer and Nevzat devranoglu

ANKARA, Reuters – Friday’s record-breaking week saw a 44% increase thanks to billions in state-backed market interventions. Also, the promise by the government that it would compensate for FX losses from certain deposits was a huge help.

After a long slide that lasted months due to unorthodox rate cuts and worries about an inflationary spiral, the currency plunged to 18.4 dollars on Monday.

Late Monday night, however, President Tayyip Erdan unveiled a program in which the Treasury would pay back losses on foreign currency deposits converted to lira. It sparked the greatest intraday rally.

According to Nureddin Nebati Finance Minister, the Anti-Dollarization Plan triggered four days of steady gains. Turks had converted approximately $900 Million worth of hard currencies into Lira.

At 0918 GMT, the currency dropped 4% to 11.85 from $11.

What traders and economists refer to as “backdoor dollar sales” by central banks, supported by state banks, was a major boost for the lira.

According to calculations by three bankers speaking to Reuters, $8.5 billion was lost in the net foreign reserves of the central bank during the first three days. According to them, the drop reached nearly $18 Billion in December.

In December 2017, the net foreign reserves of the central bank fell to $12.2 Billion, down from $21.2 Billion one week earlier and the levels reached last May. This is a direct result of intervention.

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Reuters cited four people familiar with operations including a Turkish senior official. They reported that Turkish state banks sold large amounts of dollars on Thursday, just days after Erdogan announced.

The question has been ignored by the banks of state.

Although the central bank was unavailable for immediate comment, it had earlier in the month announced that dollar-selling interventions would be made, but not this week.

Nebati said that Turkey was “using all of its instruments in a positive manner” when he spoke on Thursday about NTV’s broadcasting interventions.

Hakan Kara was the former chief economist of Turkey’s central banking. He stated that FX sales at the bank totaled $17-20 Billion this month (NYSE:). However, he did not specify how these FX sales were made.

A bank trader, who asked anonymity, stated that “state banks gave significant support to forex balance” but added that it wasn’t only the state banks selling dollars.

The central bank supported, through swaps, the sale by state banks of $128 billion to stabilize the lira in 2019-2020. This depleted Turkey’s foreign reserves, drawing harsh criticism from the opposition.

Erdogan’s pressure, Erdogan has pressured the central bank into lowering its policy rate by 500 basis points. It is now at 14%. The reduction comes despite inflation rising above 21%. Due to the depreciation of the Turkish lira, prices will rise by 30% in 2013.

According to an agreement reached with the union, Turkish Airlines will increase its employees’ pay at the rate of inflation plus 65 percent for 2022.