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Policy Minefield Ahead for Turkey as It Unwinds Albayrak’s Legacy

Lira, reserves will be pressured as swap restrictions ease
Turkey may resume FX auctions, sell bonds to rebuild reserves

Berat Albayrak — Berat Albayrak
Photographer: Simon Dawson/Bloomberg

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November 25, 2020, 5:04 PM UTCUpdated onNovember 26, 2020, 10:18 AM UTC

Turkey’s new economic managers are racing to reverse the interventionist policies spearheaded by President Recep Tayyip Erdogan’s son-in-law, but their market-friendly U-turn could initially mean more volatility for the lira.

Since the ouster of the central bank governor and resignation of finance minister Berat Albayrak earlier this month, Turkey’s begun lifting restrictions meant to prevent speculators shorting the lira, abolished a rule compelling lenders to extend credit and raised interest rates by the most in over two years.