The Turkish lira rebounded from record lows of around 18 to just over 13 against the US dollar by Tuesday opening after measures to prop the currency up were launched.
Marking its biggest comeback against the dollar in decades, the lira was traded at 13.3 versus the greenback on Tuesday.
President Recep Tayyip Erdogan announced a package of measures late Monday aimed at countering lira's drastic loss in recent weeks.
Erdogan said the depositors would be protected against losses from exchange rate fluctuations in future.
Analysts say the measure practically means an implicit rate hike.
If losses turn out to be greater than the interest promised by banks on the respective deposits, the Treasury will compensate for the losses, Erdogan said.
Locals have flocked to intraday trading to sell "substantial amounts" of dollars, state news agency Anadolu reported.
On internet banking alone, 1 billion dollars was sold to markets, the head of the Banks Association of Turkey, Alpaslan Cakar, told broadcaster Haberturk late on Monday.
Erdogan also pledged to help protect companies against exchange rate risks.
The Turkish lira has been suffering from the declining credibility of the central bank, which bowed to pressure from Erdogan to cut key interest rates by 5 per cent since September despite high inflation.
Experts have warned the new measures risk fuelling inflation in the months to come.
"With inflation likely to remain high, the lira will have to remain on a depreciating path to retain real competitiveness ... this just builds in a continuous fiscal cost of this new scheme," economist Timothy Ash wrote on Twitter.
Source: DPA
