Turkey’s currency fell as much as 2% on Tuesday, continuing significant losses witnessed the day before and losing massive gains gained the week before, as concerns over the country’s monetary policy weighed on mood even more.

The lira was 1.7 percent down at 11.9 to the dollar at 0800 GMT, after hitting a low of 11.949 earlier. Despite a strong recovery last week, it has lost 37 percent of its value against the US dollar this year.

Following billions of dollars in state-backed market interventions and a government move to cover FX losses on some deposits, the lira rose more than 50% last week, bringing the currency back to levels seen in mid-November.

Last week, President Tayyip Erdogan proposed an incentive for savers to convert foreign currency savings into Turkish lira, under which the Treasury and Central Bank will refund losses incurred due to lira depreciation throughout the deposit period.

According to a central bank letter distributed to banks on Monday, necessary reserve ratios would not be applied to these forex-protected lira deposit accounts. It will charge banks a greater commission if the amount transferred from forex to lira accounts does not exceed a particular threshold.

Before Erdogan’s announcement, the lira had fallen to an all-time low of 18.4 to the dollar, following a months-long drop fueled by fears of spiralling inflation as a result of the president’s desire for a series of interest rate cuts.

Turkey’s public banks and organisations did not sell dollars on the night Erdogan made his declaration, according to Finance Minister Nureddin Nebati.

According to traders’ calculations, the central bank’s net FX reserves excluding swaps dropped $8 billion last week, with the majority of the drop occurring in the first two days. Since the beginning of the month, when the bank began its direct interventions, they were down $17-18 billion as of last Friday.

According to official data, Turks did not sell substantial amounts of dollars on Monday and Tuesday last week, implying that they had little role in the gains.

Despite the fact that inflation has climbed to above 21%, the central bank has cut its policy rates by 500 basis points to 14 percent since September. Because of the lira depreciation, many estimate inflation to approach 30% next year.