The lira fell to $23.19 after Turkish President Recep Tayyip Erdogan appointed a new finance minister – Mehmet Simsek – which could signal a change in economic strategy.
The Turkish local currency is at its lowest historical levels against the dollar, given the possibility of a change in the economic strategy by the government led by Recep Tayyip Erdogan, with the replacement of Finance Minister Mehmet Simsek.
The Turkish lira is declining by about 0.8%, which is a small dimension compared to the “intense selling” of 7.2%, recording a decrease to $23.19, something we haven’t seen before Since the historic recession in 2021, which has been attributed to unorthodox economic policies on the part of the president.
The Turkish government has struggled to maintain the value of the lira by creating incentives to prevent people from exchanging currency and forcing the central bank to sell foreign currency reserves. In addition, the president also argues that lower interest rates are essential for economic growth.
But after his re-election on May 28, Erdogan restructured his cabinet and appointed a new finance minister. Whoever holds this portfolio now is Mehmet Simsek, the former deputy prime minister, which may mean a change in the economic strategy.
From now on, the new minister indicated that the country could not go on as it is. After his election, Mehmet Simsik said, “Turkey has no choice but to return to rational foundations.” “Turkey’s predictable and rules-based economy will be the key to achieving prosperity,” he adds.
Analysts now believe that a rate hike is possible and that the central bank may not want to wait until the June 22nd meeting. An emergency surge is “very possible and could stabilize markets in the short term,” Ulrich Leuchtmann, head of currency research at Commerzbank, told Reuters.
However, it is not ruled out that difficult times are approaching for the Turkish lira. “It smells like the beginning of the lira crisis,” the specialist said, explaining that “this is what happens when you have an exponential movement – for a long time you thought nothing was happening, and suddenly everything collapses.”
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