Turkey has loosened bank regulations designed to push consumers and businesses to reduce dollar holdings, in the latest sign of how President Recep Tayyip Erdo?an’s new economic team is unwinding some of his unorthodox policies.

The central bank’s announcement that it will cut requirements for banks to hold lira-denominated assets against foreign currency deposits came just days after policymakers nearly doubled the benchmark interest rate to 15 per cent as part of a plan to return to “rational” economic policies.

Erdo?an’s unconventional economic measures in his previous term warped Turkey’s economy, creating fast growth but very high inflation, a huge trade deficit and a lira that many exporters complain is overvalued despite a sharp fall. The government’s push for consumers and businesses to hold fewer dollars has been likened to capital controls because it makes foreign currency transactions more expensive.