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The Turkish lira has dropped against the US dollar following the appointment of a new finance minister by Recep Tayyip Erdogan.
Erdogan, who has recently won the presidential elections in Turkey, has chosen Mehmet Simsek, former economy chief and deputy prime minister, to manage the country’s economic policy. Simsek exited the Turkish government in 2018 and was replaced by Erdogan’s son-in-law Berat Albayrak, whose policies as finance minister sent the Turkish currency into a nosedive. In response to Mehmet Simsek’s appointment, the Turkish lira went down by 1.39% against the US dollar and reached 21.22. This move by Erdogan might be a signal to market participants that he is ready to return to an orthodox monetary policy and accept interest rate increases. Tim Ash, emerging markets strategist at BlueBay Asset Management, noted that the appointment would give the Turkish economy a chance of pulling back from the brink.
“It is vital for our country to reduce inflation to single digits again in the medium term, to increase predictability in all areas, and to speed up the structural transformation which will reduce the current account deficit,” the new finance minister stated.
Published 15 June 2023
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