Erdogan appoints himself as head of Turkey wealth fund

Erdogan appoints himself chairman of Turkey's sovereign wealth fund

Erdogan appoints himself chairman of Turkey’s sovereign wealth fund

In a bid to shore up the Turkish lira, Erdoğan's government issued a decree on Thursday banning the use of foreign currency in the sale and renting of property and the leasing of vehicles.

"It nearly seems like it's a game of "good cop, bad cop" being played out between the Turkish authorities - with President Erdogan on the one hand still making statements regarding his dislike of interest rates and. a very sizeable reaction from the central bank in response to the recent inflationary and geopolitical developments", she said.

Turkey's central bank raised its benchmark interest rate by the most since Recep Tayyip Erdogan came to power 15 years ago, countering the president's call for lower borrowing costs just two hours before the decision was announced.

There had been indications from the bank that it would raise rates after inflation came in at almost 18 per cent in August, according to official data last week.

"Great decision - made all the more hard by the huge pressure on the central bank from Erdogan", said Bluebay Asset Management LLC strategist Tim Ash.

The central bank said deterioration in pricing behavior continued to pose upside risks on the inflation outlook, despite weaker domestic demand conditions.

Turkey's central bank said that inflation developments pointed "to significant risks to price stability" due to the recent fall in value of the lira.

"Accordingly, the Committee has chose to implement a strong monetary tightening to support price stability", it added, explaining the hike.

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"The central bank is independent and makes its own decisions", he said.

It stood at 6.4550 against the dollar at 1012 GMT, weakening sharply from Wednesday's close after Erdogan said high inflation was a result of the central bank's wrong steps.

"Tight stance in monetary policy will be maintained decisively until inflation outlook displays a significant improvement".

The embattled currency has fallen by 40% this year amid a lack of interest rate hikes to control inflation.

The bank implemented what economists described as a hidden interest rate hike in mid-August, forcing banks to borrow at the higher 19.25 per cent through the overnight lending facility. "If you say "inflation is cause, the rate is the result", you do not know this business, friend", he added.

However, a diplomatic row with the United States and concerns about the president's influence on monetary policy have eroded investor confidence in Turkey in recent months.

In an overhaul of the Turkiye Wealth Fund, seven new members were appointed, including Erdogan's son-in-law, Treasury and Finance Minister Berat Albayrak, as the deputy chairman.

The US earlier hit Turkey with tariffs on items such as steel and aluminium in an effort to increase pressure on the country to free the detained American pastor Andrew Brunson.

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