After stemming the rise in the exchange rates thanks to a series of precautions, the economy administration has also taken steps to reduce interest rates. The yields on two-year government bonds have hit below 20 percent since July.

The Turkish Treasury sharply cut its domestic bond offers at auctions held on Monday and Tuesday. The yields consequently fell markedly below market rates. The Treasury borrowed nearly TL 1.2 billion ($214.6 million) from domestic markets, according to an official statement on Nov. 13.

An auction was held for two-year fixed coupon bonds (reopen, fourth issuance), the Treasury and Finance Ministry announced. The government bonds were settled yesterday and mature on Aug. 12, 2020, while the total tender was over TL 11 billion with a 10.3-percent accepted/tendered rate.

The interest rate of the 637-day bonds was accepted at an 8.99-percent term rate, with annual simple and compound interest rates of 17.98 and 18.79 percent, respectively. On Nov. 12, the Treasury also held two auctions and borrowed TL 1.96 billion from domestic markets.

On Nov. 9, the ministry announced that it canceled three auctions due to a high demand from international markets and austerity measures announced in the New Economic Program (NEP). The auctions previously planned to be held on Monday and Tuesday included the 10-year CPI indexed government bond, 7-year floating coupon bond and 10-year fixed coupon benchmark bond.

The reason for cancellation was seen as last week's eurobond issuance which provided the entry of TL 1.5 billion euros ($1.69 billion) to the Turkish markets. The financing ensured from abroad eliminated the necessity for three other auctions.

The October yields of two-year government bonds rose as high as 25.98 percent. But Tuesday's auction saw a 7.19 percent fall in yields, dropping to 18.79 percent. The treasury collected TL 3.1 billion in debt on Monday and Tuesday auctions. The average yield of government bonds in August was 20.11 percent. The 10-month average yield has been calculated at 15.98 percent. The fall in yields point to a reassurance of investor trust in Turkish financial markets and mitigating the risks related to Turkey.

By offering financial resources to the Turkish market from foreign markets and limiting government debt in domestic markets, this has enabled Turkey to provide finance more easily for the real economy.