Foreign investors not buying Simsek-Erkan ‘enthusiasm’ prevailing in Turkey’s finance sector

Despite the fact that President Tayyip Erdogan has appointed Mehmet Simsek and Hafize Gaye Erkan, who are well-known in international markets, to manage the financial issues in Turkey, foreign investors seem to be real cautious.

The government, which tried a new model in the economy and failed, was trying to slow down the depreciation of the TL with non-market regulations and ‘backdoor’ sales of the MB (Central Bank) rather than changing monetary policy before the election.

After the election, Mehmet Şimşek was appointed to the Ministry of Treasury and Finance to tidy up issues. Thus, it is thought that the ‘normalization’ of economic policies is targeted. It is also known that Şimşek wants staff suitable for his new approach. Accordingly, Hafize Gaye Erkan was appointed as the president of the Central Bank (MB).

However, Despite the appointment of the internationally recognized Simsek-Erkan duo and the ‘change’ messages, foreign investors are cautious.

“WE’VE SEEN THIS MOVIE BEFORE”

Speaking to global financial media one of the managers of a global investment company

Reminded his experience with Naci Agbal (former governor of MB) and said, “We have seen this movie before.” He also questioned how much space would be given to the Şimşek-Erkan duo. He described Şimşek’s appointment as an ‘optimistic development’ and said that he would continue to take a cautious approach until there were clear signs of ‘change’.

Agbal was an MB president who preferred generally accepted practices in monetary policy and therefore increased the policy interest rate in the face of the danger of inflation. He came into conflict with Erdogan on monetary policy and was subsequently dismissed by a night decree. Former AKP deputy Şahap Kavcıoğlu was appointed to replace Agbal. Agbal had been able to sit in the presidential chair for only four months.

FIRST TEST ON JUNE 22

Another professional in the sector stated that the first test of the new economic management was the monetary policy board meeting on June 22 adding “It is likely that the markets will test the water. This will either lead to a preliminary rate increase or a faster depreciation.”

“WHEN THINGS GET BETTER HE CAN RETURN TO HIS OLD WAYS“

A top manager in the sector abroad warned that Erdogan could return to his old policies after “things go well”: “The common idea is that Erdogan has had to adopt an orthodox policy stance because he has run out of options. But as soon as things stabilize, there is a risk that he will return to his old behavior, as he has in every case for the last two decades.”