Investing.com – Despite the appointment of a new governor, Turkey’s central bank continued its strong losses during trading on Friday, and is now heading towards 24 lira per dollar.
Turkish President Recep Tayyip Erdogan has announced the appointment of “Hafiza Kaya Argon”, a former finance executive in the US, as the new governor of the central bank.
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Mohamed Shemshak, the former head of economic affairs, was appointed finance minister days after he was expected to implement pro-market policies.
The Turkish currency was down 1.75% to 23.5009 pounds per dollar at these moments of today’s trading. It was down 1.81% to 25.3645 pounds to the euro.
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Important data
Turkey’s central bank balance data showed about 3 billion inflows into deposit accounts from abroad last week, bankers said Thursday.
The central bank declined to comment. Four bankers contacted by Reuters said between $3 and $3.1 billion had been deposited into the accounts.
Ahead of Turkish President Tayyip Erdogan’s re-election on May 28, Gulf countries bailed out Turkey, which briefly helped free up the central bank and markets.
Erdogan described this type of infiltration as favoring “friendly countries”.
Meanwhile, data on Thursday showed the central bank’s net international reserves fell to $5.7 billion on June 2 as demand picked up during the election period.
Ankara has secured some $28 billion in currency exchange deals with the United Arab Emirates, Qatar, China and South Korea over the past few years, most of which is believed to be held in Turkish central bank reserves.
Turkey’s share of foreign exchange has declined due to continued depreciation of the Turkish lira as a result of interest rate cuts in the face of rising inflation.
Central bank.. difficult task
The new central bank governor, Hafiza Arkan, was previously co-CEO of First Republic Bank and general manager of Goldman Sachs (NYSE: ). Hafiz Ergan will take over after Erdogan’s re-election on May 28, less than a week after the president signaled that the country would move away from unconventional economic policies.
Hafiza Arkan will be the fifth person to head the central bank in 4 years, and she will replace Shihab Gafci Oglu in 2021, who led Erdogan’s interest rate-cutting campaign that triggered the national currency’s historic decline and fueled inflation. Its highest in 24 years when it crossed 85% last year.
The announcement of the appointment of “Hafiza Arkan” in the official gazette accompanied the decision to appoint Kavji Oglu as the head of the Banking Regulatory and Supervisory Authority (BDDK).
It also cut the “central” interest rate from 19% to 8.5% in 2021, and the lira is largely governed by dozens of regulations covering debt and foreign exchange.
Exceeds expectations
The Turkish lira beat Goldman Sachs’ expectations and fell sharply after the election.
The U.S. investment bank predicted at the weekend that the Turkish lira would fall to a three-month low of 23 against the dollar, compared with an earlier estimate of 19 against the dollar.
But it has weakened sharply — beating Goldman’s forecast of more than 23 to the dollar — within days.
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