After stabilizing the local economy, Naji Abel Potter • The reason: raising interest rates • The pound crossed the 8-dollar mark • Drastic index declines on the Istanbul Stock Exchange
The Turkish lira
Photo:
IP
On November 7, Turkey's central bank governor, former Finance Minister Naci Ağbal, was given a shattered economy following the failure of Erdogan's son-in-law, Berat Albayrak, as finance minister - and he managed to lead a positive turn.
However, last weekend President Recep Tayyip Erdogan decided to replace him with אהahap Kavcıoğlu, and it is highly doubtful whether he understood where this would lead the local pound.
Following the strengthening of the pound, the currency lost no less than 14% of its value following the dismissal of A'bal - on the way to about eight pounds per dollar now.
The governor, who was eventually fired, managed to return about one-fifth of the value of the pound against the dollar in just four months.
The governor of the central bank sought to continue the positive momentum, and decided to raise the interest rate by 0.2% - twice the expectations of investors.
On the other hand, Erdogan, who for religious and electoral reasons did not join the move that was apparently taken without coordination with him, decided to fire A'bal.
His dismissal illustrated to investors that the Turkish economy had not yet found its stability - and the crash was very rapid.
It is not inconceivable that in the next few days the Turkish lira will cross the threshold of depreciation in value: 8.52 to the dollar, as it was on the day Abal was appointed to his post.
Whoever has been appointed to the post in his place is Kabagiolu, a former MP from the Justice and Development Party (AKP), who said: "We will continue to work to lower inflation."
He is a figure that is much simpler for President Erdogan to deal with for three reasons: 1. Political.
2. Ideologically.
3. Religious.
At the same time, in Turkey this morning (Monday) they tried to highlight a decrease of 0.5% in the unemployment rate in 2020 compared to 2019, but it is still a high rate: 13.2%.
The person who responded today to the serious situation is the Minister of Finance, Lütfi Elvan.
"We are continuing with our macro policy, which emphasizes the fight against inflation," Alban said.
"We will continue to implement our fiscal policy to stabilize prices in a way that complements monetary policy," he said.
The Finance Minister's statements were to no avail.
At 10:30 local time trading on the Istanbul Stock Exchange was stopped due to drastic declines in the indices.
At the same time, the BİST 100 index was down 6.65%, but that did not stop the "drop".
At 11:08, trading was stopped when the decline reached 7%, and now the index is already down by 9.71%.
Turkish President Recep Tayyip Erdogan / Photo: AFP
"Erdogan opposes drastic interest rate hikes following his concern for the construction industry, which is important to him for development plans and infrastructure," Dr. Chai Eitan Cohen Inrojek, a modern Turkish researcher at the Jerusalem Institute for Strategy and Security and at the Moshe Dayan Center at Tel Aviv University, told Israel Today.
"These plans are important to him to show the people that there is a development momentum, including subways, bridges, highways and more," he said.
Regarding Kabagiolu, Dr. Cohen Inrojek adds that "the problem is that during A'bel's tenure, people thought Erdogan had changed his mind about stabilizing the economy, but now understand that Erdogan wants to run - and not let the central bank work independently."
