DThe Turkish lira is accelerating its fall despite the appointment of a new Turkish finance minister, Mehmet Simsek, who is seen as the spokesman for sound fiscal policy. On Wednesday morning alone, it lost another 3.5 percent against the dollar. One dollar is now worth 23.06 lira, but on Erdogan’s election day, May 28, it was worth only 19.93 lira per dollar. The currency also continued to weaken against the euro. In the foreign exchange markets, one euro required 24.63 lira.
“The finance minister has no monetary policy summer,” commented Ulrich Leuchtmann of Commerzbank. The appointment of a politician who does not support Erdogan’s unorthodox low interest rate policy to fight inflation is “perhaps a necessary but by no means sufficient condition for an actual permanent reversal of monetary policy.” This was already evident during the 2018 financial crisis.
In the downward spiral that has accelerated since Erdogan’s election victory, analysts also see confirmation of their assessment that the central bank has supported the lira for as long as weak reserves allowed. Accordingly, there will be “pent-up demand” to adapt to the real economic situation in Turkey. American investment bank Goldman Sachs predicted further weakening of the lira after the appointment of Simsek. The rate of 28 lira per dollar can be reached within a year.
Meanwhile, rumors about the change of the head of the Central Bank of Turkey continue. Sahap Kavcioglu, who was appointed by President Recep Tayyip Erdogan in 2021 as the fourth governor in two years and who, at his direction, cut interest rates from 19 percent to 8.5 percent despite galloping inflation, should be replaced.
Turkish-American finance manager Hafize Gaye Erkan is bidding for the post. According to Turkish media, she met not only with Simsek, but also with President Erdogan. Erkan will be the first woman to hold this post.
The daughter of a mechanical engineer and mathematician, born in 1982, was educated as a process engineer in Turkey. According to her Linkedin entry, she quickly completed her PhD program at Princeton in the US and completed programs at Harvard Business School and Stanford University. Your resume lists a managing director position at Goldman Sachs. She served as co-CEO of First Republic Bank in San Francisco for over seven years before resigning unexpectedly over a year ago.
At least it was early enough not to have been directly and personally involved in the failure of America’s largest bank since 2008. The bank, taken under the control of regulators, was sold to JPMorgan. Erkan joined the board of directors of insurance broker Marsh McLennan. In 2002, she was also named CEO of Greystone, a real estate finance and investment company.
She clearly has no special experience in monetary policy. She is respected in New York’s financial industry and “considered tough, smart and efficient,” according to Reuters, citing Katherine Wilde, chairman of the New York Partnership, a non-profit organization where Erkan once served on the board. “She’s certainly not the type of person to push around, but she can disagree without feeling uncomfortable,” Wilde said.
Source: Frantfurter Allgemeine
Elizabeth Gray is a writer at the World Herald News. He covers trending news, and his name appears frequently in online search results for stories covering the latest developments in international politics and business.