As Turkey’s leader addresses the United Nations General Assembly on Tuesday, his finance minister, Mehmet Simsek, will meet with bankers in New York in an effort to lure much-needed investment for the nation’s troubled economy.
(Bloomberg) — As Turkey’s leader addresses the United Nations General Assembly on Tuesday, his finance minister, Mehmet Simsek, will meet with bankers in New York in an effort to lure much-needed investment for the nation’s troubled economy.
Simsek’s mission is critical to allay concerns of investors who have been wary of Turkish President Recep Tayyip Erdogan’s seeming recent embrace of more conventional policies to tighten monetary policy after pursuing unorthodox approaches for years.
Simsek will speak at an investment conference co-hosted by Goldman Sachs Group Inc. and the Turkey-US Business Council before Thursday’s interest-rate decision by the central bank that could test the determination of Turkey’s new economy team to contain price gains that are now running at nearly 60%.
Most analysts surveyed by Bloomberg see the central bank raising the key rate to 30% from 25% on Thursday.
“While he is well respected by investors, Simsek could be still facing a tough crowd,” said Piotr Matys, a currency strategist at In Touch Capital Markets Ltd, ahead of the meeting.
“Some market participants remain concerned that President Erdogan may make yet another sudden U-turn and abandon the path of conventional policies in favor of yet another experiment that resulted in staggeringly high inflation,” he said.
Erdogan has removed three consecutive central bank governors in recent years for not being dovish enough. But after his reelection in May, the president installed market-friendly decision makers, including Simsek and Central Bank Governor Hafize Gaye Erkan, a former Wall Street banker, to run Turkey’s $900 billion economy.
On Monday, Erdogan indicated his support for policies pursued by Simsek and the central bank to rein in inflation.
“Our economy team is now engaged in intense work” and “successfully maintaining the process of containing inflation by the end of this year, or the beginning of next year,” he said in New York.
Before Erdogan’s policy pivot, years of ultra-loose monetary policy contributed to an inflation crisis and prompted an exodus of foreign investors from lira assets.
(Updates with analyst in fifth paragraph, background.)
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