The Turkish deputy prime minister denies that the country is in a currency crisis despite several interventions by the central bank to prop up the Lira.
The currency has been under pressure as investors worry about the economic and political turmoil seen in the country.
"Lira has been under pressure. Largely affecting traumatic experiences of last year and terror attacks in Turkey. And of course there's also a structural current account deficit. But, it's quite likely that this is not going to last for longer, simply because policy response is in the making," Mehmet Şimşek, deputy prime minister of Turkey, told CNBC in Davos.
Just like other emerging markets, Turkey has been impacted by promises of higher interest rates in the U.S. But terrorist attacks and the several steps by Turkish President Recep Erdogan to increase his powers have made the situation worse, making the lira the worst performing currency so far this year. Erdogan has also been opposed to interest rate hikes as the cost of credit would rise.
The central bank has intervened to prop up the currency: it increased rates last November, surprising markets, and some analysts expects further rises this month.