Financial turmoil prompts resignation in Turkiye
The Turkish minister of transport and communications, Enis Oksuz, resigned on Tuesday after a day of financial turmoil that saw the lira drop 8 percent to its lowest-ever level against the dollar while interest rates soared.
The markets rebounded the next day after the resignation because Mr Oksuz was perceived as one of the biggest obstacles to an economic recovery program backed by the International Monetary Fund (IMF).
The government has been strained by cabinet disputes over parts of the IMF programme. .Mr. Oksuz was blocking plans to bring private sector directors to the board of Turk Telekom, the state telecommunications monopoly designated for privatization.
Fears that the Fund program could be about to collapse were soothed by Mr Oksuz' departure. The lira regained 3 percent on Wednesday last week, to bounce back to 1,325,000 per dollar. The main stock exchange index rose 4.8%, and interest rates on the benchmark Treasury bond dropped 10 percentage points to around 104 percent.
The crisis was fuelled by speculation of a default in the country's debt repayment. On Tuesday the government found itself unable to auction more than one sixth of the bonds it had intended to sell.
High interest rates threaten Turkey's ability to repay its $130 billion debt. Prime minister Bulent Ecevit promised "concrete measures" to reduce interest rates when coalition party leaders meet later in the week. But analysts are still worried that the weakened lira could fan inflationary flames as import costs rise.
