Turkey's currency rebounded Tuesday with an over five-percent rise, climbing to about 6.5 lira against US dollar, already fiercely impacting other countries.
Argentina's peso weakened by as much as over two-percent against the US dollar while South African rand plunged as much as 10 percent against the dollar in early trading in Asia. The Philippine peso, Indonesian rupiah, Malaysian ringgit and Thai Baht are also feeling tremors from a weak lira.
The main reason why the lira plunged is that Turkey doesn’t have a strong long-term vision to plan their country’s economic and financial system, said Chen Jiahe, chief strategist of Cinda Securities.
Some analysts also say the lira dropped mainly due to worries about President Erdogan's influence over the economy, rising US interest rates, and worsening ties with Washington.
Thus, Turkey's monetary authority and banking regulator moved to stabilize the free fall of the lira, which seems to have taken effect.
The bank cut the lira reserve requirement ratio by 250 basis points for all maturities and that for non-core foreign exchange liabilities by 400 basis points. In a statement, the central bank said these measures will provide the financial system with 10 billion lira, six billion US dollar and three billion US dollar equivalent of gold liquidity.
Also, Turkey's Banking Regulation and Supervision Agency stepped in by limiting the amount of foreign exchange and lira swaps and swap-like transactions. The limitations are set to be at a maximum of 50 percent of a bank's equity.
The lira's depreciation may be causing headaches for Turkish President Recep Tayyip Erdogan, but it's been beneficial for tourists visiting Turkey. Foreign visitors are flocking to Turkey's high-end shops, taking advantage of their increased spending power at the expense of a weak lira.
Fatima Ali, tourist from Kuwait, said that they bought everything in Turkey thanks to the currency depreciation. "We're buying clothes, we're buying makeup, we're buying brand names. We went to Istinye Park (a shopping mall) and my girls bought brand names. I mean the prices are good, very good."
Many of the tourists are from neighboring Arab countries, heading to upscale neighborhoods in Istanbul. Employees at high-end clothing stores say that to see this number of tourists is unusual even during the busy season.
( CGTN’s Zhu Feng and Peng Xiaoyun also contributed to the story.)
By CGTN’s Liang Rui