ANKARA: Turkey's battered financial markets bounced back on Monday as the cabinet met for the first time since a major reshuffle by Prime Minister Recep Tayyip Erdogan, battling a damaging political crisis over a high-profile graft probe.
The lira rallied to 2.1396 against the US dollar in morning trading after it touched a record low of 2.17 last week as Erdogan, who has dominated Turkish politics for 11 years, faced mass protests and growing calls to resign.
The Istanbul stock exchange jumped 3.22 percent to reach 65,944.10.
Erdogan vowed on Sunday he would survive the scandal triggered by the corruption probe which has targeted several close allies over allegations of bribery for construction projects as well as illicit money transfers to sanctions-hit Iran.
"This campaign is neither against Tayyip Erdogan's personality, nor against AK Party rule," Erdogan said at a rally on Sunday, referring to his ruling Islamic-rooted Justice and Development Party (AKP).
"You should know it is targeting the national will. It is a campaign against the Turkish nation."
The political turmoil in Turkey, which had been seen as a model of democracy in the Muslim world, has shaken the country ahead of a crucial batch of elections next year kicking off with local polls in March.
Erdogan has blamed a political plot by international conspirators and their domestic collaborators to undermine his government and sap the country's growth, as the scandal also threatens his undeclared ambitions to run for president in 2014.
Erdogan named 10 new ministers -- almost half the cabinet -- after his interior, economy and environment ministers stepped down last week following the detention of their sons in the graft investigation.
The crisis has highlighted a power struggle between Erdogan's government and an influential US-based Muslim cleric, Fethullah Gulen, whose loyalists wield influence in several spheres of Turkey's administration including the police and the judiciary.
"This operation is an assassination attempt ahead of elections," new Interior Minister Efkan Ala was quoted as saying by pro-government Sabah daily on Monday, in remarks directed at Gulen.
"Why have you waited for two years to act?" he said. "This is almost a coup to topple the government."
Gulen, who has been living in self-imposed exile in Pennsylvania since 1999 after being accused by the then-government of plotting to form an Islamic state, has denied involvement in the corruption probe.
However Erdogan's government has ordered the sacking of dozens of police chiefs believed to be linked to Gulen and who oversaw sweeping raids on December 17 that saw the detention of dozens of people including the ministers' sons and high-profile businessmen.
Turkey's once powerful military, the self-declared guardians of the secular state, has said it would not get involved in the latest political crisis, which comes just months after mass anti-government demonstrations rocked the country in June.