As the Turkish lira (TRY) continued to slide and bond yields surged, Deputy PM Mehmet Simsek tried to assure investors that the volatility on Turkey's markets is temporary.

The lira fell to an all-time low of 3.98 per dollar in early trade on November 22 while the 10-year and 2-year government yields climbed to 13.20% and 14.29% from the previous day’s 13.08% and 14.21%, respectively. The main stock exchange index, the BIST-100, was up 0.8% d/d.

The lira was trading at 3.9438/USD as of 0915 local time on November 23.

Analysts say that Turkey's economy, which is suffering from sticky double-digit inflation, is overheating and is crying out for an interest rate rise. However, there is concern that the policy approach of President Recep Tayyip Erdogan, who continuously presents the case for an unorthodox rate cut, is hindering the work of the supposedly independent central bank.

“Turkey’s markets have been experiencing volatility recently due to concerns over the country’s relations with its Western allies. But, these fluctuations are temporary, the problems with the US and the West are temporary,” Simsek said, outlining his perceptions of the depreciation difficulties in a speech in Istanbul on November 22.

The government would implement comprehensive reforms aimed at improving the business climate in the first quarter of 2018, he added.

The Turkish economy is resilient to any shocks, PM Binali Yildirim added on November 22. The government and the central bank would take all necessary measures, he added.

Yildirim, meanwhile, dismissed the US case against Turkish-Iranian gold trader Reza Zarrab for breaching Iran sanctions as “baseless and politically motivated”. Turkey has never violated international laws, he said in a speech in Ankara.

“Turkey and the US are allies. We should not allow lawyers to harm relations between the two countries,” Yildirim added.