When the Turkish Central Bank meets this Thursday, it will not just attract domestic attention. The international financial and foreign exchange markets have their eyes locked on the country as they eagerly await confirmation that Turkey’s monetary and fiscal policy makers are indeed coming to their senses.
Since President Recep Tayyip Erdogan brought former finance minister and Merrill Lynch banker Mehmet Simsek back into his Cabinet, and with US banker Hafize Gaye Erkan as the new head of Turkey’s Central Bank, there have been increasing signs that Erdogan has finally given the green light for a policy turnaround.
The reelected president had repeatedly hinted at the prospect of a change of direction in recent days. But international investors’ mistrust of Erdogan’s wayward economic and financial policies runs deep. Emerging markets expert Timothy Ash of BlueBay Asset Management in London, who has covered Turkey extensively for years, summed up the difficult task for Simsek, Erkan and their cohorts in a mid-June tweet, pointing out they were busy “figuring out just how bad things are.”
