The Central Bank of the Republic of Turkey (CBRT) will continue to maintain its independence and rules of governing market policies, Deputy Prime Minister in charge for the economy Mehmet Şimşek has said.

In a televised interview, Şimşek said that Turkey will not step back from its basic principles and will solve all the problems without fighting the rules of the market.

"We understand the investor concerns. We will continue to take the necessary steps," Şimşek said.

He said the country's central bank is capable of taking action against speculative attacks amid recent volatility in the foreign exchange rates.

"Its hands are not tied [...] It will do what is necessary," Şimşek told Turkish private broadcaster NTV.

He added that the CBRT had the full support of the government and its decision to hike interest rates on Wednesday to support Turkish lira had shown its independence.

"The Turkish central bank has taken a strong step that had immediate effects [on the market]," Şimşek said.

Long-term interest rates in the U.S. have rapidly increased and has surpassed 3 percent, the deputy prime minister emphasized, drawing attention to the fact that the 3 percent is a critical threshold.

"It has an effect. The U.S. dollar is gaining value against all currencies. This trend is not unique to Turkey. There are reasons why the Turkish lira is dissociating from peers. We are on the eve of the election. There are concerns about the fiscal policy. The hesitations about the fiscal discipline are irrelevant. With a strong reaction, the CBRT has showcased that is actually independent and that it will do what it needs to be done when it is needed," Şimşek said.

CENTRAL BANK FIXES CURRENCY RATE IN EXPORT REDISCOUNT CREDITS

The CBRT said in a statement Friday that it has fixed exchange rates in export rediscount credits in another step to curb the fall in Turkish lira.

"The

repayments of rediscount credits extended before May 25, 2018, which will be due by July 31, 2018 (inc.), can be made in Turkish lira at an exchange rate of 4.20 for U.S. dollar, 4.90 for euro, and 5.60 for pound, provided that they are paid at maturity," the bank said on its official Twitter account.

It added that the exchange rate on the date of credit extension will be applicable in credit repayment if the rate on the date of credit extension is higher than those rates.

Earlier Thursday, the CBRT announced that it had increased the maximum total amount of forward foreign exchange (NDF) sale positions to $8 billion from $6.5 billion in the second quarter of 2018 in efforts to stabilize currency rates.

It also said the upper limit for the total amount of forward foreign exchange sale position was determined to be $10 billion

until the end of 2018.

Meanwhile, in order to stem the slide in the Turkish lira, which fell to 4.93 against the U.S. dollar Wednesday, the CBRT raised the late liquidity window by 300 basis points to 16.5 percent from 13.5 percent after an extraordinary meeting of its monetary policy committee.

The bank kept other rates unchanged, describing the move as a "powerful monetary tightening" policy and saying it's ready to continue using all instruments.

Following the CBRT's decision, President Recep Tayyip Erdoğan has reiterated Turkey's commitment to follow free market rules and institutions and emphasized that the country will abide by global governance principles on monetary policy, reassuring markets and investors.

Announcing the Justice and Development Party's (AK Party) election declarations for June 24 polls, President Erdoğan said Thursday that the government will decisively work to narrow the current account deficit.

"The main goal is to keep inflation at single digits. We will take measures to lower cost pressures. Instruments for currency liquidity will be deployed when necessary," the president said in Ankara. He also stated that a mechanism to manage corporate debt in foreign currency will be established.

"We will maintain an economic structure based on the free market," Erdoğan pledged, referring to the post-election program.

The CBRT's move came as the Turkish lira plunged this week to record lows of 4.92 and 5.74 against the U.S. dollar and the euro, respectively.

The U.S. dollar/Turkish lira exchange rate has risen nearly 20 percent since the beginning of this year. At the beginning of the year, the U.S. dollar/ Turkish lira rate was 3.78 while the average rate was 3.65 last year.

On Friday it opened at around 4.8 and was trading at 4.70 at 4.15 by local time, following CBRT's move and Şimşek's remarks.

At the beginning of the year, the dollar/Turkish lira rate was 3.78 while the average rate was 3.65 last year.