Turkish lira falls despite well-regarded finance minister. In thin Asian trading on Monday, Turkey’s currency fell roughly 1% to 21 per dollar after the appointment of highly regarded Mehmet Simsek as finance minister.
Last week, the lira hit 21.8 to the dollar.
Between 2009 and 2018, Simsek, 56, acquired the markets’ trust as finance and deputy prime minister. He stated Sunday the country must return to “rational ground.”
His nomination indicates that President Tayyip Erdogan’s newly elected government is shifting away from unorthodox interest rate cuts in the face of soaring inflation that sank the lira.
“The hope is that he (Simsek) could instigate much-needed economic orthodoxy and engage with the market more effectively,” said Federated Hermes senior portfolio manager for developing markets fixed income Mohammed Elmi.
According to Elmi, Turkey’s annual consumer price inflation reached a 24-year high of 85% last year and 44% in April, requiring more monetary tightening.
“A simple return to credible economic policy could see a marked change in Turkey’s investment appeal,” he said.
“Turkey has a lot going for it: a young population, a growing middle class, and a strategic location.”
