European colonists knew when they encountered wild turkeys in North America that it was a sign of abundance. Today, Turkeys can be enjoyed roasted or fried as part of many dishes and its meat has an excellent nutritional profile.
Hafize Gaye Erkan initiated rate hikes in June, reversing years of low rates which sent inflation spiraling and drove foreign investors away. Her cabinet leaders quickly assured investors her economic program would remain unchanged.
Turkey’s Lira Hits Record Low
Turkish currency hit record low against the dollar on Thursday, according to Ahlatci Investment’s research manager, Baris Urkun. Lira value rose above 8.75 to one dollar from 8.56 one week prior.
Investors fear Erdogan’s domineering control over Turkey’s economy and central bank, which has aggressively pursued an easing policy to promote growth. That policy has contributed to a free-falling currency and inflation which threatens household savings.
Analysts anticipate the Turkish Central Bank will maintain current interest rate policies until it detects signs of inflation and expectations decreasing, something analysts anticipate could take some time given Turkey has been drawing down its foreign exchange reserves to protect the lira, according to analysts. Costs associated with insuring Turkish debt have surged this week amid mounting doubts about its financial health.
President Tayyip Erdogan Retiring Central Bank Governor
Once celebrated for turning Turkey into an economic success story, Erdogan now draws widespread criticism both domestically and internationally for suppressing dissent and adopting rules characteristic of autocratic regimes. His unconventional economic policies have been blamed for high inflation and cost-of-living crises which make life hard for many Turks.
Hafize Gaye Erkan joined an elite team of market-friendly technocrats led by Finance Minister Mehmet Simsek that Western analysts considered Turkey’s best hope at weathering any potential financial crises. Under their watch, rates began rising rapidly after years of ultra-low interest rate policy under Erdogan that sent inflation and foreign investment spiraling upward.
Erkan has come under intense criticism in both social media and opposition newspapers for allegedly permitting her father to make unauthorized personnel decisions at the bank, leading investors and other stakeholders to express disquiet at her resignation and question whether President Erdogan will continue backing her team.
Deputy Governor Fatih Karahan Takes Over
Turkey lies between Europe and Southwestern Asia. Established by national hero Mustafa Kemal Ataturk from remnants of a defeated Ottoman Empire in 1923, who implemented radical social and legal reforms that revolutionized society, Turkey stands on both continents today.
Turkey is home to an abundance of bird species, earning it the nickname of “bird paradise”. Additionally, this popular tourist destination boasts beaches and historic sites like Istanbul’s old town that draw in visitors.
President Tayyip Erdogan quickly appointed deputy governor Fatih Karahan as Hafize Gaye Erkan’s replacement, signaling that her tight policy stance would continue. Karahan, who has served on the rate-setting monetary policy committee since July, previously worked as an economist at both the Federal Reserve Bank of New York and Amazon, according to his biography on the central bank website. Investors appear pleased by his appointment, who should continue with her tight approach.
Turkey’s Inflation Rate Hits 65%
Turkey’s inflation rate hit an alarming 65.56% in December, leaving many households unable to afford rent and groceries. President Recep Tayyip Erdogan abandoned unconventional economic policies which economists believe caused currency crises and led to price spikes, prompting yet another hike from Turkey’s central bank this year.
The bank revised up its inflation forecasts for 2023 and beyond, raising them from 63% to 36% and warning of temporary factors such as higher administered prices or geopolitical risks that will delay disinflation.
Fatih Karahan will replace Erkan as governor and analysts expect him to stick to its tight policy stance. Investors have shown their trust by purchasing Turkish assets led by Karahan and Finance Minister Mehmet Simsek; but any change of leadership may prompt doubt from them until proof is shown that new leaders will pursue similar policies.
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