As Turkey’s leader addressed the United Nations General Assembly on Tuesday, his finance minister, Mehmet Simsek, met with bankers in New York in an effort to lure much-needed investment for the nation’s troubled economy.
(Bloomberg) — As Turkey’s leader addressed the United Nations General Assembly on Tuesday, his finance minister, Mehmet Simsek, met with bankers in New York in an effort to lure much-needed investment for the nation’s troubled economy.
Simsek’s mission is an effort to allay concerns of investors who have been wary of Turkish President Recep Tayyip Erdogan’s seeming recent embrace of more conventional policies to tighten monetary policy after pursuing unorthodox approaches for years.
During the investment conference co-hosted by Goldman Sachs Group Inc. and the Turkey-US Business Council, Simsek told investors that the economy administration had Erdogan’s full support .
Simsek also said tackling inflation was the “No. 1 priority.”
His comments come ahead of Thursday’s interest-rate decision by the central bank that could test the determination of Turkey’s new economic team to contain price gains that are now running at nearly 60%.
Most analysts surveyed by Bloomberg see the central bank raising the key rate to 30% from 25% on Thursday. When adjusted for inflation, that still leaves real rates deep in negative territory.
“While he is well-respected by investors, Simsek could be still facing a tough crowd,” Piotr Matys, a currency strategist at In Touch Capital Markets Ltd., said ahead of the meeting.
“Some market participants remain concerned that President Erdogan may make yet another sudden U-turn and abandon the path of conventional policies in favor of yet another experiment that resulted in staggeringly high inflation,” he said.
Erdogan has removed three consecutive central bank governors in recent years for not being dovish enough. But after his reelection in May, the president installed market-friendly decision makers, including Simsek and Central Bank Governor Hafize Gaye Erkan, a former Wall Street banker, to run Turkey’s $900 billion economy.
On Monday, Erdogan indicated his support for policies pursued by Simsek and the central bank to rein in inflation.
“Our economy team is now engaged in intense work” and “successfully maintaining the process of containing inflation by the end of this year, or the beginning of next year,” he said in New York.
Before Erdogan’s policy pivot, years of ultra-loose monetary policy contributed to an inflation crisis and prompted an exodus of foreign investors from lira assets.
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