Berat Albayrak, a former energy minister who entered parliament for the first time in 2015, will be in charge of a new ministry of treasury and finance.
Turkey’s lira slumped after President Recep Tayyip Erdogan appointed his son-in-law, Berat Albayrak as treasury and finance minister, fueling investor unease about the direction of economic policy.
Albayrak will replace Mehmet Simsek, a former Merrill Lynch banker whom investors consider to be market-friendly and a counterweight to Erdogan’s pro-growth bias that has weighed on sentiment. The lira fell more than 2.5 per cent to 4.68 per dollar, extending one of the biggest slides across emerging markets this year. Albayrak served as energy minister since 2015.
Investors are concerned that authorities aren’t committed to unwinding months of stimulus that inflated the current account and budget deficits and left assets exposed as major central banks scale back years of loose monetary policy. Political pressure on the central bank not to raise rates in the face of accelerating inflation has also stoked worry about the policymaker’s independence.
Erdogan, who was sworn in as Turkey’s first executive president on Monday, told investors in May that he plans to take more control of economic policy in his new role. He has also pledged to lower interest rates, spooking investors who say the central bank needs to keep real policy rates high to support the nation’s assets and help the economy slow. Turkey grew faster than China last year and the central bank raised interest rates by 500 basis points since April.