Turkish Finance Minister Berat Albayrak said on Sunday he was resigning for health reasons, in an Instagram statement confirmed by an official, marking a second-weekend surprise after the central bank chief was ousted on Saturday.

The statement came after a 30% plunge in the lira currency’s value this year to record lows as the economy faces a sharp contraction during the coronavirus pandemic. In the early hours of Saturday, Turkish President Tayyip Erdogan – who is Albayrak’s father-in-law – replaced the central bank governor.

“I have decided that I cannot continue as a minister, which I have been carrying out for nearly five years, due to health problems,” the statement said. Albayrak became the finance minister two years ago after serving as an energy minister.

Two sources at the presidency could neither confirm nor deny the statement when reached by Reuters, but a Finance Ministry official confirmed its authenticity.

The lira <TRYTOM=D3> – the worst performer in emerging markets this year – firmed 1.5% to 8.415 against the U.S. dollar at 1814 GMT.

Albayrak, 42, was appointed energy minister in 2015 and shifted to finance after Erdogan was re-elected with sweeping new executive powers in 2018.

During his tenure at finance, Turkey’s economy has been hit by two bad slumps, double-digit inflation, and high unemployment. The lira has shed more than half of its value since the beginning of 2018.

Erdogan would need to approve the resignation, which surprised analysts and lawmakers.

Deputy Transport Minister Omer Fatih Sayan said on Twitter he hoped Albayrak’s resignation would be rejected, adding “our country, our people and our community need you”.

Mehmet Mus, the deputy parliamentary group chairman for the ruling AK Party, said Albayrak had taken important steps to strengthen the economy and that he hoped Erdogan would not accept the resignation.

“We personally witnessed his diligent work. If our president sees fit, I hope he continues at his post,” Mus said on Twitter.

Reuters

Turkish minister says no plans to intervene in lira – media

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Turkey’s Finance Minister Berat Albayrak ruled out intervening to support the record-low lira currency and reiterated government concerns that rising interest rates could hurt the economy, Milliyet newspaper reported on Thursday.

Albayrak said uncertainty around the U.S. election and the coronavirus pandemic had boosted the dollar, adding that the exchange rate was not the only factor reflecting Turkey’s economic performance with production, exports, and employment ahead of other countries, the newspaper said.

His comments coincided with data from the central bank showing net reserves have shrunk by $2.28 billion to $18.93 billion while Turkish locals’ holdings of foreign currencies and gold – seen as a gauge of domestic confidence in the currency – have risen to a record high of $221.04 billion.

Meanwhile, the lira <TRYTOM=D3> struggled again, hovering close to Tuesday’s record low against the dollar – an outlier among emerging market currencies that enjoyed broad support as the greenback slipped to a two week low. The lira also briefly crashed through the 10 to the euro level <EURTRY=R>, weakening nearly 1%.

Analysts increasingly expect that the central bank, under pressure from stretched FX reserves, could be forced to raise rates again to head off the lira’s 30% depreciation this year, and to address inflation stuck around 12%. The currency has tumbled more than 8% in just under two weeks.

Sticking to a familiar government line, Albayrak said it was possible to curb the rise of foreign currencies through interest rates but the government did not prefer this method because of “concern that a rate hike will decrease production and … employment”.

In the comments made in response to AK Party lawmakers, Albayrak also added “the (currency) fluctuation was not well above expectation” and intervention in the exchange rate had not been considered yet.

Analysts are concerned about the toll of FX interventions on already stretched reserves, with Goldman Sachs estimating on Thursday that the central bank has burnt through $101 billion on such operations so far this year.

Albayrak’s words did little to soothe investor concerns about the central bank’s independence. Commerzbank analyst Tatha Ghose said the comments contradicted a tightening bias articulated by the central bank (CBT) and further undercut its political independence.

After a formal tightening in September, the central bank held its policy rate <TRINT=ECI> steady at 10.25% last month, against expectations for a rate hike, but raised the top limit of its rate corridor <TRLLW=ECI> to 14.07%.

So-called back-door measures had lifted the average cost of funding <CBTWACF=> to 13.94% by Tuesday.

“Albayrak basically confirmed that the CBT has gone out on a limb, without the blessing of political leaders, to tighten monetary policy” in recent months, Ghose said.

“The market will look through such tightening even more now, and the exchange rate is likely to soon come under pressure.”

Reuters

Turkish lira hits fresh low ahead of U.S. vote

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Turkish Finance Minister Berat Albayrak humiliated himself in front of international investors while attempting to explain his economic plan to reverse the loss of the Turkish lira’s value.

This is according to an article published on Tuesday by Holger Zschaepitz in Die Welt, a prominent German daily, evaluating Albayrak’s presentation to prominent economic circles in Washington.

Albayrak, who is also the son-in-law of Turkish President Tayyip Erdogan, outlined a reform package to block and reverse Turkey’s economic deterioration, in a bid to convince some 400 investors gathered at a hotel room in Washington.

In an already recessed economy, however, along with the quaking lira and high inflation, the Turkish minister failed to enthuse investors, according to four attendees who spoke to Reuters.

Albayrak unveiled his new economy program earlier in Istanbul but it did not meet expectations, according to the German newspaper.

Zschaepitz, in his article titled: ‘Erdogan’s son-in-law has disgraced himself to investors’, wrote that markets have subsequently proven that Albayrak’s presentation was not convincing.

He noted soon after Albayrak’s presentation at the Park Hyatt Hotel, that the Turkish lira lost 2 percent value against the dollar, which marked a total loss of 9 percent since the beginning of 2019.

Some investors, according to the report, labeled Albayrak’s performance as ‘the worst ever by a high-ranked Turkish official’.

A prominent economist told Axios news agency that Albayrak’s speech was ‘an awful show’. “I have never seen a government representative who is as ill-prepared as he is,” he added.

The economist claimed that Albayrak couldn’t convince investors because he did not clarify how he would control high inflation and public debt, and that he did not offer a timeframe for when measures would be implemented.

American news and information website, Axios, also mentioned that Albayrak, Erdogan’s son-in-law, replaced two highly respected ministers, despite having limited qualifications.

Turkey’s economy has been in recession since the fourth quarter of 2018; therefore, the Turkish lira is not seen as a safe investment to many economists, especially as high inflation increased costs and shook the private sector.

The Turkish Statistics Institute announced on Monday that the country has seen the highest unemployment rate in 10 years, with a 3.9 percent increase.

Ankara sees foreign investments in the country as the most important step to fix the deteriorating economy, but many news reports say that investors have not been convinced by the Finance Minister’s short-term plans.

Turkey reform package fails to restore investors’ confidence in lira – S&P Global

Turkey’s reform package laid out last week won’t be enough to restore Turkish households’ and foreign investors’ confidence in the lira, one of S&P Global’s top sovereign analysts said on Monday.

Turkey pledged last week to inject almost $5 billion into its state-owned banks to help them cope with an expected rise in defaults following the country’s slump into recession, but the plan has been criticized for being light on detail.

“The big question for foreign investors and for Turkish households is whether the lira is still an investable currency,” S&P’s top EMEA sovereign analyst, Frank Gill, said. “In our opinion, the reform package did not answer that question.”

Earlier this month S&P had said Turkey’s B+ foreign currency and BB- domestic currency ratings were not currently at risk of a downgrade though a further fall in lira would be “very, very bad news” for the country’s companies and banks.

Turkish Lira weakens as Finance Minister Albayrak speaks on reform plan

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