Lütfi Elvan takes helm as finance minister, says his appointment surprised him

Duvar English

Newly-appointed Treasury and Finance Minister Lütfi Elvan said on Nov. 10 that his appointment surprised him, in his first comments since President Recep Tayyip Erdoğan chose him for the post.

Elvan assumed duty without a handover ceremony as is the tradition, with authorities citing his precedent's health issues.

Treasury and Finance Minister Berat Albayrak's resignation on Nov. 8 and the government's silence on the issue that lasted for over 24 hours caused surprise in the country and among the ruling Justice and Development Party (AKP) ranks.

Albayrak, who is Erdoğan's son-in-law and who resigned with an Instagram post, is strikingly nowhere to be found since he deleted his social media accounts and reportedly keeps his phone turned off.

Overnight, Erdoğan appointed former deputy prime minister Elvan to the post.

The political upheaval began in the early hours of Nov. 7 when Erdoğan replaced the Central Bank governor with former finance minister Naci Ağbal, raising hopes for an interest rate hike that could boost the beleaguered lira and ease double-digit inflation.

But Erdoğan - a self-declared enemy of high interest rates - returned to a theme he has repeated as Turkey's economy has been hit by two bad slumps in as many years.

The Turkish President on Nov. 10 said that Turkey is in a "historic struggle" against those seeking to shackle it with high interest rates, inflation and exchange rates.

"We are in a historic struggle against those who want to force Turkey into modern capitulations through the shackles of interest rates, forex rates and inflation," he said in a speech.

Turkey will overcome political obstacles to work on improving economic growth, employment and exports, he said.

Lira weakens once again

Elvan, an AKP member, was development minister between 2016 and 2018 and before that served as a deputy prime minister.

At 1000 GMT, the lira was down 2.1 percent at 8.22 against the dollar, after weakening to as far as 8.385. It has shed 29 percent this year to a series of record lows and is the worst performer in emerging markets.

Turks have snapped up hard currencies at record levels amid concerns over negative real rates, high inflation, depleted central bank FX reserves and the risk of Western sanctions over Turkish foreign and defense policies.

While Erdoğan has publicly endorsed low rates, newly-installed governor Ağbal said on Nov. 9 the Central Bank would "decisively" use all policy tools to achieve its main goal of price stability, teeing up a possible rate hike.

Goldman Sachs analysts said after the Elvan appointment that they were sticking with a forecast for a hike in the policy rate to 17 percent by year-end from 10.25 percent currently.

But in a note, they cautioned against over-interpreting the appointments of Agbal and Elvan.

"Most importantly, we think that whether there will be enough political support to bring about the required tightening will be the main issue," they wrote.