The Turkish lira continued to retreat from its historic low against the dollar on Thursday after Qatar announced a $15 billion funding package for Turkey's wobbling economy.
By Thursday mid-morning, the dollar was down more than 2% against the lira to 5.8124. It follows a surge over the last week and a half that saw the dollar climb to over 7 lira at its worst. The rand was trading at R14.42 to a dollar, after touching R14.72 on Wednesday. It was trading above R15 over the weekend.
The latest strengthening of Turkey's currency comes after Qatar announced a $15 billion funding package for Turkey late on Wednesday evening.
Tamim bin Hamad Al Thani, the Amir of Qatar, tweeted: "Today, in the framework of important negotiations with His Excellency President Erdogan in Ankara, we announced a package of deposits and investment projects worth $15 billion in this country, which has a productive, strong and robust economy."
For his part, Turkish President Tayyip Erdogan also tweeted his sincere thanks to "the Qatari people for standing by Turkey".
Turkey's currency has come under pressure due to rising diplomatic tensions and cooling trade relations with the US, Erdogan's perceived control over the country's central bank, and a strong US dollar. Erdogan has accused the US of waging an economic "war" against the country.
The lira pressure began to ease on Monday when the Turkish central bank promised it would take "all necessary measures" to protect the economy. Turkey's banking watchdog on Wednesday also moved to crack down on shorting of the lira.
Hussein Sayed, the chief market strategist at FXTM, said in an email on Thursday: "Such measures may only provide short-term relief and policymakers need to address the longer-term challenges that will face the country.
"With inflation expected to skyrocket in the coming months, a current account deficit that exceeds $50 billion and more than $16 billion of debt maturing in 2019, investors fear that the currency crisis will turn into a debt crisis.
"Even if tensions between the US and Turkey are resolved, investors still need to see serious fiscal and monetary measures to restore confidence."
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