Only hours after being sworn into office on Monday, Turkish President Tayyip Erdogan managed to rattle markets with a leadership shakeup, taking advantage of sweeping new powers that were decided on in a tightly contested referendum last year.
Of particular concern to investors is the degree to which Erdogan will exert influence on central bank policy, a question that the reelected leader answered quickly with a decree that will allow him to pick a central bank governor.
#Erdogan‘s new cabinet suggests he is closing his ranks further, forming all yes men (and 2 women) cabinet while giving his family the full control of economy and treasury in #Turkey. His long-time side-kick Mustafa Varank also becomes a minister. pic.twitter.com/KMSsgt6iVo
— Abdullah Bozkurt (@abdbozkurt) July 9, 2018
In addition to the central bank governor, Erdogan has gained power to select officials across a broad range of agencies without review. On Monday, he appointed his son-in-law, Berat Albayrak, to head a newly formed treasury and finance ministry, sidelining previous office holders in the process.
— jeroen blokland (@jsblokland) July 9, 2018
The lira, which has fallen precipitously this year, plunged more than 3% after the leadership decisions were announced on Monday.
The moves have already stoked market fears that Erdogan will enact economic policies that will cause the ongoing currency crisis to spiral out of control.