(Bloomberg) -- Turkey’s newly-appointed Finance Minister Mehmet Simsek said Wednesday he’d build a new team to manage the $900 billion economy and design a “credible program,” reinforcing expectations he’s preparing to unwind a low-interest rate policy that’s driven away investors and fueled a cost-of-living crisis.
“While there are no short cuts or quick fixes, rest assured that our experience, knowledge & dedication will help us overcome potential impediments,” Simsek wrote on Twitter shortly after he was sworn in. “Our immediate priority is to strengthen our team and design a credible program.”
President Recep Tayyip Erdogan, who was re-elected for another five-year term last month, has long championed an unorthodox economic policy based on low borrowing costs. But years of loose monetary policy have pushed up inflation, depleted foreign reserves and led to an exodus of foreign investors spooked by increasingly unpredictable and opaque interventions.
Erdogan’s decision to appoint Simsek, a former Merrill Lynch strategist and finance chief with credibility among investors, has intensified expectations that Turkey is preparing to change its approach, reducing state intervention in the currency market and potentially raising borrowing costs.
Simsek said his guiding principles would be “transparency, consistency, accountability and predictability.”
Simsek’s comments come on a tumultuous day for the Turkish currency markets, which witnessed the first sign of an impending policy shift.
The lira weakened as much as 6.8% to a record low of 23.1891 against the dollar, with state-run lenders temporarily halting dollar sales previously used to keep the exchange rate in check.
The Treasury and Finance Ministry asked the central bank to ease off on currency-market interventions via state banks, people with knowledge of the matter told Bloomberg, speaking on condition of anonymity.
Lira Plunges as Turkey’s New Economy Team Pulls Back Defense
©2023 Bloomberg L.P.
BNN Bloomberg Picks
Carbon tax, trade barriers: experts on how to reduce food costs
Variable rate mortgage holders on the hook for thousands in interest: report
Half of Canadians don't think they will be ever buy a home: survey
How can mortgage holders prepare for higher rates at renewal?
Energy prices are driving inflation. What will central banks do?
70-year amortization periods not realistic: OSFI