Rising rancor between Ankara and its western allies and the central bank’s interest rate policy are pressuring lira.
Turkey has appointed former Deputy Prime Minister Lutfi Elvan as its treasury and finance minister to replace President Recep Tayyip Erdogan’s son-in-law Berat Albayrak, the country’s Official Gazette said on Tuesday.
Erdogan accepted Albayrak’s resignation late on Monday – a day after he announced on social media that he was quitting for health reasons and would spend more time with his family.
Albayrak’s surprise statement, in turn, came a day after Erdogan appointed former Finance Minister Naci Agbal as the chief of Turkish central bank.
Albayrak, who has four children with Erdogan’s daughter Esra, presided over a rough period in the Turkish economy, which is yet to recover from a currency crisis in 2018.
After the coronavirus pandemic erupted, Albayrak’s stewardship had come under much criticism.
The Turkish lira has lost about 30 percent of its value since the start of the year, hitting a record low of 8.58 against the dollar on Friday, while annual inflation has hit 11.89 percent.
The lira surged 6 percent against the dollar on Monday, following news of Agbal’s appointment and Albayrak’s departure.
On Monday, newly installed governor Agbal said the central bank would “decisively” use all policy tools to achieve its main goal of price stability.
Elvan, from Erdogan’s ruling AK Party, was development minister between 2016 and 2018 and before that, served as a deputy prime minister.
Many people in Turkey, including some officials in Erdogan’s AK Party, believed the president was grooming the 42-year-old former businessman Albayrak as a future party leader and even a possible successor.
But in a highly unusual resignation statement posted on Instagram on Sunday, Albayrak said he was stepping down.
His announcement came a day after Erdogan sacked the central bank governor and, according to officials, ignored Albayrak’s preference for a successor.
Albayrak’s message, addressed not to Erdogan but “for the attention of the public”, said he was resigning for health reasons. It was followed by silence as presidency officials said they scrambled, and failed, to track him down for clarification.
It took more than 24 hours for the government to respond, with a brief statement from the presidency saying Erdogan had accepted Albayrak’s resignation.
Albayrak’s resignation statement did not spell out any political dispute but hinted at discord in its description of a “difficult time like this, where good and bad are mixed, where it is difficult to differentiate between truth and lies”.
The departure will remain “politically embarrassing” for the Turkish president, said Wolfango Piccoli of political risk consultancy Teneo.
“Erdogan spent a huge amount of political capital in advancing Berat’s path within the party,” Piccoli said. “He granted him unparalleled power and influence, and that came at a cost of alienating key figures in the AK Party.”