The Turkish lira hit a new all-time low against the US dollar on Wednesday. This decline coincided with President Tayyip Erdogan's preparations for forming a new cabinet and determining the future direction of economic policies after his electoral victory. Mehmet Simsek, a former economy chief known for his orthodox policy expertise, is expected to be included in the cabinet, signaling a potential departure from Erdogan's unorthodox economic approach.
The continuous depreciation of the lira has been fueled by Erdogan's unconventional economic policies, including interest rate cuts despite high inflation. The lira has experienced three consecutive days of losses, plummeting nearly 1.6% to a record low of 20.75 against the US dollar. Market volatility for the lira has also increased, with the one-year measure reaching its highest level in at least 15 years.
Attention now turns to Erdogan's imminent announcement of the new cabinet appointments, which will play a crucial role in economic policy management. The inclusion of credible individuals in key positions is crucial to restore market confidence and demonstrate a willingness for change. Observers will closely monitor the actions of the economic team, questioning whether they will adopt orthodox policies, implement potentially detrimental measures, or opt for temporary solutions to assess the situation.
