LONDON, December 22, Reuters -- Turkey's financial markets saw their wildest 48 hours in a decade after a plunge in the lira forced the government into a new plan to convince Turks to stick with the currency.
Incentives include the removal of a withholding tax on government bonds and an increase in private pension contributions, as well as a promise to hand out money if the country's inflation rate continues to exceed banks' savings rates.
Below are four charts on how the drama unfolded:
The lira had threatened to spin out of control, having lost half of its value since the central bank began slashing interest rates in September. The plan triggered a 32% rebound on the view that Turks are less likely to panic and convert all their lira into dollars or gold for now.
The currency has moved on course for its second best week in recent memory, with only a 33% gain in 2001 surpassing it.
Currency experts cautioned that there has been little resistance to the moves because of the quietest time of the year in the FX markets.
It also meant that any trader who was shorting the currency or betting it would fall would have to close their bets quickly to prevent major losses.
The swap rates went up in the mass scramble to safety because of the fact that many of the bets are made using currency swaps.
The rebound would have been amplified by the fact that most banks and traders have closed positions ahead of the Christmas break at the end of the week, meaning reduced volumes.
Refinitiv data shows trading volumes of 34,000 and 41,000 lots over the last two days, some of the lowest of the year, showing trading volumes over the last two days.
The main FX market lira volatility gauges were already at record highs after the lira hit record lows last week, but they went up further after the lira saw one of its biggest intraday swings - 55% at is most extreme yet.
The country's main stock market was forced to stop trading as stocks wonced at the sharp jump in the currency. Istanbul's main bourse is down over 13% since Monday, putting it on course for its worst week since the 2008 financial crisis.