Turkey’s economy is a shambles, many say. And late yesterday, President Erdogan compounded the Turkish turmoil by ousting one of his very important officials, the Governor of the Central Bank, Murat Cetinkaya. Here we go…
Turkey may seem off the beaten track niche for investing circles, but on its lone exchange, it can still strut over 132 billion dollars of market value. Alas, no matter how tucked away the Turks might be geographically, they’ve by no means evaded the choppy waters of global trade.
In charge of sailing a country through such waters is the chairman, the governor, the head, or the president of the Central bank. Bearing an enormous responsibility, he or she is the conductor of an economic orchestra of forces, from inflation to interest rates. The nominated official is tasked with spinning multiple plates, juggling economic growth and breathing life into stocks, without letting sentiment get too out of control. Centre stage of market speculation, this is not someone you want to throw a curveball.
All-out firing your economic conductor is something else entirely. However, when you have an election coming up, and you need stock market sentiment behind you, sometimes removing a tight fed frontman can feel like your only option. That’s precisely why US investors are monitoring Turkish developments so closely this morning.
Trump’s been slamming his Fed officials lately for their reluctance to loosen up and boost the stock market. Erdogan’s stolen his line. “You’re fired!” he’s said to that sticky top official, a stunned world now awaiting the aftermath.
It’s not looking pretty. Stocks on the Borsa Istanbul 100 nosedived on the news, along with the lira, the country’s currency. We’re all crossing our fingers that this rogue wave doesn’t capsize the rest of Europe, as the US, an ocean away, gets a lesson from afar. What a week this is turning into!