ISTANBUL (Reuters) - Turkey’s lira tumbled to another record low on Thursday and has lost nearly a third of its value this year.
The sell-off has been fuelled by worries about President Tayyip Erdogan’s control over monetary policy, and his push for lower interest rates. It has deepened due to a widening rift with the United States, a NATO ally and trading partner.
Erdogan, the former Istanbul mayor who has become Turkey’s most powerful leader since Mustafa Kemal Ataturk founded the republic in 1923, is a self-described “enemy of interest rates”.
For years he has advocated lowering rates to make it easier for small and mid-sized industrialists - a critical voter base - to borrow and expand.
In the last decade he has tightened control over the economy and recently said he wants more say over monetary policy, deepening worries about central bank independence.
He has a reputation as a hands-on micromanager with the final say when it comes to big decisions in areas from foreign policy to education and finance to security affairs. A constitutional change in April 2017 equipped the presidency with sweeping new powers. He assumed the role of Turkey’s first executive president in June.
Along with Erdogan, who is unquestionably in charge of economic policy, the following are some other key economic figures and institutions:
Erdogan’s son-in-law, the 40-year-old Albayrak holds an MBA from New York’s Pace University. He was appointed treasury and finance minister last month, in one of Erdogan’s first acts after being re-elected with new powers.
He was energy minister from late 2015 and, before that, the chief executive of Calik Holding, a conglomerate seen as close to Erdogan’s AK Party.
Albayrak’s appointment as finance minister, and the absence from the new cabinet of ministers deemed market-friendly, also helped send the lira lower. Albayrak has pledged to change the recent unfavourable perception of Turkey by global investors.
He said lowering inflation will be a priority, adding there will be no compromise on economic growth or budget discipline. Economists have said it will be difficult to achieve such divergent goals simultaneously.
Since assuming office, Albayrak has met business leaders, academics and export associations, looking to address immediate and medium-term economic issues, according to Erhan Aslanoglu, an economics professor at Piri Reis University, who attended at least one of the meetings.
Albayrak was open to hearing the opinions of all parties and seemed to welcome both positive and negative comments as he took notes while listening, Aslanoglu said, describing the meeting as a frank discussion.
Born in 1976, Cetinkaya holds a dual degree in international relations and sociology from the prestigious Bogazici University.
Before his appointment as a deputy governor at the central bank in June 2012, he worked in Islamic banking and at state-owned Halkbank. He was the architect of the first sukuk issue by a Turkish bank, Kuveyt Turk, where he was a deputy director.
Compared with his predecessor, Erdem Basci, who was criticised by investors for overseeing a complex, multi-rate policy, Cetinkaya has adopted a simpler tack and returned the policy framework to a single rate.
Facing intensifying concern from investors over the bank’s independence, Cetinkaya has stuck to careful responses to public questions about political influence.
At the bank’s most recent inflation report, at the end of last month, he said the bank had “independence of its objectives and tools” and reiterated that the inflation outlook was the sole driver of the bank’s decision making.
One of the nine newly established policy boards under Erdogan’s new executive presidency, the “Economic Policies Board” is seen as playing an advisory and research role, according to pro-government newspaper Sabah.
The board will be expected to develop proposals to facilitate and accelerate investments and formulate policies for export-oriented production strategies, the daily said. It will also carry out research and produce proposals on how to develop Turkey as a finance centre and boost Islamic banking.
Erdogan is yet to announce the exact role of the board - or its members. However, there is speculation that three of his current economic aides - Cemil Ertem, Hatice Karahan, Yigit Bulut - might be named members.
Editing by David Dolan