Investors in Turkey should doubt that the replacement of the country’s central bank governor and finance minister represents real change in economic policy, the Finance Times said.
Turkish President Recep Tayyip Erdoğan sacked and replaced the governor of the central bank on Saturday. He installed a new treasury and finance minister on Tuesday after his son-in-law, Berat Albayrak, resigned from the post at the weekend.
Economic policies followed by the Erdoğan government, including coercing the central bank into keeping interest rates low to engineer a borrowing boom, have led to a slump in the value of the lira and caused the bank to burn through most of its foreign exchange reserves defending the currency.
“Investors hope that the resignation of the finance minister Mr. Albayrak and the appointment of a long-time critic of his policies to the position of central bank governor is an admission of defeat by Erdoğan,” the FT’s editorial board said.
The most important step Turkey’s new economic team now needs to take is to provide competent economic management. But Erdoğan’s policy approach, which includes staunch opposition to higher interest rates, means that will be a struggle, the FT said.
“Investors should be sceptical that the latest shake-up represents a fundamental change in policy,” it said.