Struggling to go through the present economic hard times, the Turkish government has taken a series of measures as the Turkish lira has been battered for a few months.
The Central Bank of Turkey on Thursday made a surprising move by increasing the rate higher than expected to fight against soaring inflation and attempt to haul back the lira.
The bank hiked the one-week repo auction rate 625 basis points from 17.75 percent to 24 percent, which raised the value of the lira by five percent to six lira against one U.S. dollar.
The bank described its move as "strong monetary tightening to support price stability."
It was the latest in a series of steps the government has taken since August to choke dollar demand.
A presidential decree on Thursday morning obliged the use of the Turkish lira for buying, selling and renting of real estate, and leasing of vehicles, in a fresh step to support the ailing local currency.
Purchases, sales and rentals of the properties and leases of vehicles made in foreign currencies have to be converted into lira within 30 days, and the current contracts, the agreed prices in foreign currencies will be redefined as lira within one month, according to the decree.
Companies unwilling to pay their rents in foreign currencies or make investments such as opening new shops will be more confident after the decree, said Sinan Oncel, chair of United Brands Association.
The economy is now facing challenges after a sharp depreciation of Turkish lira, triggered partly by concerns about the government's influence over monetary policy and a diplomatic dispute between Turkey and the United States.
Turkish lira has tumbled by more than 40 percent since the beginning of 2018, driving up the cost of food and fuel, and sending the inflation rate to 18 percent, the highest in a decade and a half.
Turkish President Recep Tayyip Erdogan's insistence on lowering interest rates has fuelled concerns that the Central Bank lacks independence.
As part of these measures taken to support the tumbling currency, the Central Bank has launched a forex swap market for banks, while limiting derivative transactions.
Turkey, with exports hitting 157 billion U.S. dollars in 2017, also obliged its exporters to convert their overseas revenues into lira.
According to a decree announced last week, exporters must convert 80 percent of their foreign exchange revenues into lira within 180 days of receiving payment.
Turkish citizens recently tend to deposit their savings under the mattress rather than in the bank, while exporters are calculated to keep their earnings in foreign accounts amid a sense of insecurity, according to Ugur Gurses, an independent economy analyst.
"Therefore, foreign exchange accounts in the banks decreased by 7.9 billion U.S. dollars in the past month," he said, noting that the government should not just focus on the outcomes but address the root causes by launching economic reforms.
Soaring inflation and a widening current account deficit have caused an atmosphere of panic over the exchange rate, according to Erdal Saglam, an economic commentator of Daily Hurriyet.
Some believe the decline of the currency is related to global developments, while others say it is caused by foreign countries trying to push Turkey into a difficult situation, he noted.
Earlier in the day, Turkish President Recep Tayyip Erdogan vowed to take further steps to rein in fluctuations of foreign exchange rates, which he describes as "an economic war staged by foreign powers against Turkey."
In conclusion, the Turkish president said whatever reasons behind the "current problems," he is "determined to resolve them within the principles of the free market economy."