It is very disappointing when you are struggling to help someone, but your help does not improve the situation and makes it even worse. This is exactly what happened to the President of Turkey, who unexpectedly discovered he was a great economist. Recep Erdogan, commenting on his presidential program, said he intended to empower the executive to control the economy.
The Turkish Central Bank has long ago lost its independence as a financial regulator, but if the new law is adopted, it will in general become a formal body. Like any other presidential candidate, Erdogan explains his desire to usurp the financial power as care for the common people. “I will take the responsibility as the indisputable head of the executive in respect of the steps to be taken and decisions on these issues,” he said in the interview. However, the Turkish lira did not appreciate such comments. Immediately after the news, the Turkish currency hit a new record low.
“Sentiment has been the main reason behind the decline of the lira this year, and Erdogan’s comments won’t improve that. Investors have been concerned about government intervention in monetary policy, which is compromising the independence of the central bank. The president’s latest remarks will indeed make some uncomfortable. Unfortunately, unnerving investors is the last thing he needs to do if he wants to stabilize the lira,” Ziad Daoud, chief of Middle East economist for Bloomberg Economics, said.
