Lira gains wiped out as Erdogan replaces finance minister

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Investors fret that finance minister Lutfi Elvan’s exit will further diminishes the likelihood of a quick return to orthodoxy

Turkish president Recep Tayyip Erdogan. Picture: PPO/MURAT CETINMUHURDAR/HANDOUT VIA REUTERS

The currency weakened as much as 2.1% on Thursday, erasing all the previous day’s gains, after Erdogan replaced the country’s treasury and finance minister Lutfi Elvan amid a growing rift over interest rate cuts. The central bank sold dollars on the open market on Wednesday for the first time since 2014, briefly helping to stem a sell-off that has seen the lira depreciate almost 45% in 2021.

The sell-off of the Turkish lira resumes after President Recep Tayyip Erdoğan replaces his finance minister amid a disagreement over monetary policy. The lira has now slumped more than 40% in 2021 against the dollar. The worry for investors is that the departure of Elvan, who had opposed rate cuts, will further diminish the likelihood of a quick return to orthodoxy. His replacement, Nureddin Nebati has been a deputy finance minister since 2018 and is perceived to be close to former economy adviser Berat Albayrak, a son-in-law of Erdogan.

 

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Oh wow, flashbacks of Nene’s firing in 2015. I feel for the people of Turkey. Imagine your life savings in free fall.

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