Turkish lira falls amid rumors of Finance Minister Mohamed Simşek resignation

(MENAFN) The Turkish lira experienced a significant decline against the U.S. dollar following widespread rumors that Mohammad Simsek, the Minister of Treasury and Finance, had resigned from his position. The lira dropped to its lowest point ever, hitting 34 liras per dollar by the end of last week’s trading, marking a dramatic decrease of more than 12% in its value since the beginning of the year. This sharp decline was largely attributed to market reactions fueled by unverified claims about Simsek's departure, which spread rapidly across social media platforms. In response to the turmoil, Turkey's Capital Markets Authority announced that it had launched an investigation into social media posts that alleged Simsek’s resignation, which contributed to a significant downturn in the Istanbul Stock Exchange. The regulator is scrutinizing accounts that potentially misled investors, leading to financial losses.

Amid the growing speculation, Mohammad Simsek took to the social media platform X (formerly Twitter) late Friday to categorically deny the rumors, stating, "I did not submit my resignation. The scenarios circulating are incorrect." Despite his denial, the market had already reacted, with the dollar surging against the lira to unprecedented levels. Financial experts pointed to the unverified allegations of Simsek's resignation as a primary factor behind the dollar's rise, noting that such rumors had exacerbated existing concerns about Turkey's economic stability. These rumors, which circulated on platforms like YouTube and X, suggested that Simsek had stepped down due to disagreements over the government’s economic policies, particularly the rising interest rates and stricter monetary measures, leading to heightened uncertainty about the future of Turkey’s efforts to control one of the world’s highest inflation rates.

Simsek, who assumed control of Turkey’s economic strategy in mid-2023, has been part of a technocratic team that has worked to shift the country away from previous unorthodox economic practices that prioritized growth over price stability. Under his leadership, the dollar exchange rate had been around 33.12 Turkish liras in mid-August, with interest rates reaching 50%. Despite the challenges facing the economy, Turkey saw a positive development in its tourism sector, with an 8% increase in foreign visitors during the first seven months of the year, totaling over 28 million. Many of these tourists, particularly those visiting Istanbul's traditional markets, benefitted from the strength of their home currencies against the weakening lira, underscoring the broader economic implications of the lira’s decline. 

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