The Economist magazine, ‘The brave banker of Ankara – Naci Ağbal Turkey in trying to restore monetary discipline’ in an article titled ‘TL last months that begins a new life, which increases the credibility of the Central Bank and reserves the recharge’ analyzes the policies of the central bank governor, Naci Ağbal, and the possible future of these policies.
The magazine, stating that Ağbal ‘deserves congratulations’, says TL had a ‘terrible year’ in 2020 and lost nearly 20 percent of its value against the dollar. The magazine recalls that among emerging currencies, only the Argentine peso and the Brazilian real perform worse.
The magazine claims that the Turkish lira outperformed the peso and the real until the rise in interest rates on US Treasuries, which heralded the increase in the cost of borrowing in the US. late February and led to the sale of Turkish assets:
“Ağbal came with the right recipe. When he took office last November, a currency crisis and an estimated $ 130 billion took over foreign currency reserves wasted in the foolish defense of the TL. So far he has raised interest rates by a total of 675 points, has promised to rebuild the bank’s reserves and improve communication with the financial markets outside the country with Turkey ”.
The magazine commented that Ağbal’s job was not easy, saying: “Erdogan has already expressed his displeasure with the recent interest rate hikes. The president fired two of Ağbal’s predecessors in less than two years. “You may not hesitate to take the third,” he says.
Hakan Kara, one of the former chief economists of the Central Bank, whose views were quoted by the magazine, said: “It presented a more predictable and transparent framework; this helped him manage expectations, “says Piotr Matys of the Dutch financial services firm Rabobank, saying that” The central bank has done a great job to regain some of its credibility. “
‘It won’t be easier’
However, The Economist also predicts that Ağbal’s job will not be any easier. The magazine says allowing Turkey to cope with the pandemic and wipe out most of the estimated £ 1.8 waste economy provides the abundance of credit growth in 2020 and puts pressure on prices. The Economist has been on the rise in Turkey for a year, reaching 15.6 percent in February, it reminds me.
The Economist says that “Ağbal says that he will maintain a tight monetary policy to quell inflation, which he says he wants to reduce to 5 percent in less than three years,” but emphasizes that it is not clear whether Ağbal will continue with this policy, or even with your duty. , the magazine continues as follows;
“President Recep Tayyip Erdoğan, who promised not to interfere with his work when Ağbal took office, has kept this promise so far. However, the future of the Central Bank is at the mercy of the president. Turkey does not need to go until the 2023 general election. However, there are possible rumors of early elections. As these rumors mount, pressure will mount on Ağbal to replace monetary discipline with economic growth. Erdogan has already expressed his displeasure with the recent rate hikes. The president fired two of Ağbal’s predecessors in less than two years. You may not hesitate to take the third. “