Turkey's Erdogan appoints new Finance Min as Lutfi Elvan resigns amid record Lira fall

Finance Minister of Turkey, Lutfi Elvan on Wednesday placed his resignation after the country witnessed an unprecedented drop in the exchange rate of the Turkish Lira against the US dollar, a decree published in the official Resmi Gazette reported. In replacement, President Recep Tayyip Erdogan appointed Nureddin Nebati as the new minister of Treasury and Finance as the record lows further diminished the purchasing power of the Turks, the Sabah publication reported. Nebati holds a doctorate in political science and was engaged in the textile business earlier. He has served as the Deputy Finance Minister prior to this appointment during Elvan's tenure.

It is pertinent to mention that Elvan's resignation comes amidst the currency crisis that has further deepened after he replaced the former finance minister of Turkey, Berat Albayrak, the son-in-law of President Erdogan. Albayrak held the post between 2015-16. During the same period, Elvan was the deputy prime minister of Turkey.

Lira slumps to record lows against US dollar

The Lira slumped to an unexpected 13.9519 per dollar on Tuesday after the Central Bank of Turkey cut interest rates last week and President Erdogan declared the move an "economic war of independence." On Wednesday, it staged a sign of partial recovery on the back of direct central bank intervention in currency markets. However, as of Thursday, the Turkish Lira was around 14.43 per dollar as of 8 am in Singapore. It was down 1.4 per cent from New York close after the news of Finance Minister Lutfi Elvan resigning his post was announced, as per Bloomberg.

Prez Erdogan defends 'low-interest rate' policy

As per the Middle East Eye, notably, the drop comes even after the Turkish Central Bank on Tuesday "directly" intervened "selling transactions due to unhealthy price formations in exchange rates" to the rate of Lira from dropping further, as the currency struggled after President Erdogan doubled down on cutting interest rates. Central Bank's move came moments before Erdogan spoke to state broadcaster TRT, defending his view that high interest rates cause high inflation.

Despite the fluctuation in rates, the Turkish President vowed to continue the controversial 'low-interest rate' policy. Additionally, he also argued that the policy is aimed to ensure a strategic growth in investment, employment, production and exports, further adding that he believes that "interest rates make the rich richer and poor poorer."

"Turkey has now abandoned the monetary policy based on high interest rates that caused several developing countries to remain stagnant," Erdogan told lawmakers in parliament in Ankara on Wednesday, as per Middle East Eye.

As per official data cited by the publication, despite the growth of 7.4% in the Turkish economy in the third quarter of 2021, the Lira has lost at least 43%< of its value in the past year, rapidly diminishing the savings and inflating the cost of daily use products. The official inflation rate remained 19% last month pushing middle and lower-income citizens struggling to make ends meet.

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