A day that began with the official announcement of the Central Bank of Turkey for interventions in the foreign exchange market in an attempt to “put a brake” on the collapse of the Turkish pound, ended with Finance Minister Lutfi Elvan submitting his resignation to President Recep Tayyip Erdogan.
An article in the Official Gazette reported that Erdogan had accepted the resignation of Elvan – who was appointed in November 2020 after the resignation of Erdogan’s son-in-law Berat Albayrak from the post of Minister of Finance via Instagram, after receiving fire for the disappearance of stockpiles. Turkey – and was replaced by Deputy Finance Minister Nurettin Nebati.
The forerunner of change had appeared a few hours ago when the purchaser of the Central Bank of Turkey had resigned.
Nebati gave signs a few days ago that he is the new “president’s man” “Turkey is determined to pursue a policy of lowering interest rates, and the ‘manipulative attacks’ on the pound, which has hit new lows this week, will leave no lasting impression,” he said. damage “, he had stressed a few days ago from the position of Deputy Minister of Finance.
“Given the current market conditions, there is no question that interest rates will remain below inflation.” current transactions.
Another thing that should be noted about Nebati is that he is a close associate of the groom. By Berat Albayrak. Thus, Albayrak, who “burned” about $ 140 billion in reserves in his doomed attempt to breathe new life into the pound, sees his man at the helm of the finance ministry on the first day of a new policy of selling reserves. The only difference is that then Albayrak did it in secret and now the move is obvious.
According to Bloomberg, the Central Bank of Turkey (TCMB) gave $ 700 million on the first day of its new policy, which many saw as positive as an attempt by the TCMB to react. If we add to that about $ 340 million in future contracts sorted, then the amount exceeds $ 1 billion on the first day alone.
In a historic slide, the pound hit a record low of 45 13.45 against the dollar as central bank President Erdogan’s defense cut policy to 15% despite inflation hovering at 20%.
The currency has hit a record low for 11 consecutive sessions and has lost 45% of its value since the beginning of the year, with half of those losses taking place since the beginning of last week.
The Turkish central bank’s gross reserves stood at $ 128.5 billion, with $ 60.5 billion coming from the bank’s swap deals, according to the latest figures released on November 19th. When swaps and other items are removed, its net reserves amount to $ 35 billion. But the bank has repeatedly said that its gross reserves – the total amount available at the time – are more important than net reserves.
According to Bloomberg, Turkey’s direct intervention in the foreign exchange markets on Wednesday, the first in seven years, shows that policymakers intend to draw a line on how much they are willing to tolerate the weakness of the pound.
However, how well policymakers will be able to save time for the faltering currency will ultimately depend on how big the … chest is and how willing the TCMB is to deplete its contents. At the moment, Erdogan now has full control over it, but they depend on the Turkish president.
* Turkey: Its interventions central bank in the foreign exchange market led to a recovery of the pound
* Erdogan: We are following a risky but correct path in the economy
* Turkish stocks are both the best and the worst in the world this quarter
Source From: Capital