Turkish Finance Minister Reassures Businesses on Market Economy
(Bloomberg) — Turkey’s new finance minister met with a group of businesspeople to assure them the government won’t retreat from free market principles amid amid a currency rout triggered by consecutive rate cuts.
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The six-hour meeting in Istanbul on Saturday was a first for Nureddin Nebati since he was appointed treasury and finance minister on Dec. 2 by President Recep Tayyip Erdogan. His predecessor, Lutfi Elvan, was known to oppose rate cuts that Nebati favors, and before his resignation publicly warned that “institutions” should work “within their mandates” against inflation.
“The business world doesn’t want to think whether the dollar will fall to 9 per lira or rise to 14,” Anadolu Agency cited Nail Olpak, head of the Foreign Economic Relations Board, as saying after the meeting. “It’s now clear that there won’t be any compromise on the free market.”
The Turkish lira has slumped 46% against the dollar this year, the worst performance among major currencies tracked by Bloomberg. The central bank, which has slashed the one-week repo rate by 400 basis points since September to 15%, is expected to continue cuts on Dec. 16, defying inflation that hovers at more than four times the targeted 5%.
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More than 60 participants at the meeting voiced their concerns on issues including rising energy prices, pending payments by state institutions and tax receivables, according to a Twitter post by Rifat Hisarciklioglu, head of the Union of Chambers and Commodity Exchanges. Sekip Avdagic, who heads the Istanbul Chamber of Commerce, said he was supporting the government’s “new policy axis.”
A week before he was appointed minister, Nebati posted a series of tweets in support of Erdogan’s low rates policy, saying the current-account deficit was the economy’s biggest problem and that rates should be cut against supply-side inflation.
The minister is expected to meet bank executives later this month, according to Mehmet Ali Akben, head of the banking regulator.
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