I haven’t paid attention to Turkey in a while, but given that President Erdogan is still in charge, this is unsurprising:
The turbulence rattling Turkey’s financial markets since the shocking removal of the central bank governor March 20 has caused significant losses for foreign investors, threatening to further scare them away at a time when Turkey badly needs inflows of foreign funds to stabilize its nosediving currency.
In the week prior to the turmoil, foreigners had put about $500 million in fresh investments in Turkish stock shares and treasury bonds, according to central bank data, while another $1.3 billion in “hot money” came from currency swaps between foreign and Turkish banks. The foreign investor portfolios totaled $70.7 billion, including $28.9 billion invested in stock shares, $10.2 billion in government and private-sector bonds and $31.6 billion in bank deposits. The swaps, meanwhile, were estimated to have reached $24 billion. In sum, foreign “hot money” in Turkey totaled nearly $95 billion when President Recep Tayyip Erdogan fired central bank governor Naci Agbal with an abrupt overnight decree, less than five months after appointing him to the post in a bid to curb a mounting trend of dollarization in the country. …
In the ensuing havoc in the markets, stock shares plummeted, yields on government bonds rose and the lira slumped more than 10% against the dollar, meaning significant losses for foreign investors. A clearer picture of those losses will emerge in mid-May when the central bank releases balance of payments data for March. [AL-Monitor]
A government amateur and a theocrat. Not a good combination.
Erdogan’s aides have only added to the air of uncertainty. In a television interview March 22, the head of the presidential finance office, Goksel Asan, said, “Only the president knows why he replaced the central bank governor. He could share the reason if he deems it necessary.” Senior presidential adviser Cemil Ertem, for his part, said the frequent replacements of central bank chiefs could be the result of “brainstorming outside economics.”
Petulancy is as good an answer as any in a situation like this. And if I were an investor and looking at this, I’d be quite devastated at the idea that this was personal whim, or dislike, or something of the Turkish President.
We can look forward to more like this.
