Turkey’s central bankers will meet on Tuesday to review the country’s monetary policy. Investors will be hoping for a rate rise to shore up the lira – 2017’s worst performing currency.
Last week, the reserve bank announced it would tweak banking regulations in a bid to slow the currency’s decline; economists and investors say that only a rate rise will do.
Tuesday’s decision is being seen as a test of the central bank’s independence. Turkey’s powerful president, Recep Tayyip Erdogan, has long scoffed at the possibility of raising interest rates due to the negative effect this would have on investment.
In signature style, Mr Erdogan has acknowledged the lira’s plunge by equating currency speculators to “terrorists” and insisting “someone is trying to force the country to its knees after failing to seize it with tanks, guns and F-16s on July 15″.
This thinly veiled jab at US-based cleric Fethullah Gulen plays into Erdogan’s broader political battles; in April he will put his much talked about presidential reforms to the Turkish people in a referendum. By then, the president will hope to have arrested the lira’s decline and set the economy on a more sustainable path.
Simon is the founder of Foreign Brief who served as managing director from 2015 to 2021. A lawyer by training, Simon has worked as an analyst and adviser in the private sector and government. Simon’s desire to help clients understand global developments in a contextualised way underpinned the establishment of Foreign Brief. This aspiration remains the organisation’s driving principle.