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Turkey: Finance minister resigns amid currency crisis

Turkish Finance Minister Lutfi Elvan has resigned, and his deputy Nureddin Nebati has been appointed to replace him
Former Turkish Finance Minister Lutfi Elvan (AFP/File photo)

Turkey's Finance Minister Lutfi Elvan resigned on Wednesday amidst an unprecedented currency crisis, according to a decision published in the Official Gazette. 

President Recep Tayyip Erdogan appointed Nureddin Nebati as the new minister of treasury and finance, the Sabah newspaper reported. 

The resignation comes amidst a currency crisis that has seen the Turkish lira fall to record lows, further diminishing the purchasing power of Turks. 

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Earlier on Wednesday, Turkey's Central Bank intervened to help the lira, as the currency continued to struggle after President Erdogan doubled down on cutting interest rates. 

After years of pressure from Erdogan and three governors, the Central Bank said it "directly" intervened on Tuesday night by "selling transactions due to unhealthy price formations in exchange rates".

It added that it had "started to conduct transactions at Borsa Istanbul Derivatives Market [VIOP] due to unhealthy price formations in exchange rates".

The intervention came moments before Erdogan spoke to state broadcaster TRT on Tuesday night, where he defended his view that high interest rates cause high inflation. 

The lira slumped even further, to 14 lira to the dollar, as the president defended his policy on air. 

'Risky but correct' policy

Despite the currency fluctuation, Erdogan vowed to continue defending his policy of low interest rates. 

"Turkey has now abandoned the monetary policy based on high interest rates that caused several developing countries to remain stagnant," Erdogan told lawmakers in parliament in Ankara on Wednesday. "Instead, we have transitioned to a growth strategy aiming for investment, employment, production and exports... Interest rates are an evil that makes the rich richer and the poor poorer.

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"What we are doing is right," he added. "We have made and are making a politically risky but correct plan. The world knows how uncomfortable I am with high interest rates. I have never been pro-interest rates. I wasn't today and I won't be tomorrow." 

The focus on growth has seen the Turkish economy expand by 7.4 percent year-on-year in the third quarter of 2021, official data published on Tuesday indicated. But the lira has lost at least 43 percent of its value in the past year, rapidly eroding the savings of Turks and increasing the cost of everyday products.

Nebati will be the third finance minister to be appointed since November last year, when then finance minister Berat Albayrak handed in his resignation.