"Turkey's Wealth Fund has appointed President Recep Tayyip Erdogan as its new chairman, according to a notification in the Official Gazette", state news agency Anadolu said. Financial markets have grown increasingly concerned that Turkey is in danger of adding its name to the list of countries seeking a rescue loan from the International Monetary Fund.
The currency has plunged in recent months and even after Thursday's rise was down nearly 39% against the dollar this year.
Several emerging markets have confronted the same struggles, dogged by a strengthening USA dollar that makes it more hard for countries such as Turkey to pay back hefty external debt. The leader placed his son-in-law as head of the finance ministry and in a separate move has attempted to take control of the country's sovereign wealth fund.
The Monetary Policy Committee led by Governor Murat Cetinkaya on Thursday increased the one-week repo rate by 625 basis points to 24 per cent, more than the median estimate in a Bloomberg survey that called for a hike of 325 basis points. In the other direction, with the economy heading into recession, lower rates would help inject growth stimuli.
Relations with the United States deteriorated last month after Washington imposed sanctions on two Turkish ministers over the detention of an American pastor and President Donald Trump doubled steel and aluminium tariffs on Turkey.
Turkey's central bank today surprised markets with a bigger than expected rate hike to battle soaring inflation and boost the lira, prompting the embattled currency to surge in value. He repeated however, his belief that interest rates should be cut, calling them an "instrument for exploitation". "There has been no change in my sensitivities on the issue of interest rates". "I'm saying let's cut these high interest rates".
He also decreed that local property sales, rental contracts and leasing transactions could no longer be conducted in foreign currency, in a fresh bid to buttress the flagging lira. But on Thursday, the Turkish Central Bank did just that. "If you say "inflation is the cause, the rate is the result", you do not know this business, friend", he added.
Brett Diment at Aberdeen Standard Investments said raising rates would put "Turkey on the slow road to recovering some monetary policy credibility, and that is critical".
It vowed the tight stance in monetary policy would be "maintained decisively until inflation outlook displays a significant improvement".
The lira had weakened earlier on Thursday before the central bank decision as Erdogan's fierce criticism of the central bank and high interest raised doubts in investors' minds about how much the bank might tighten policy.
- Canada's Freeland to hold NAFTA talks in Washington on Tuesday
- Alex Cora discusses Trump's comments on Puerto Rico
- Jerome Boateng reveals why he rejected Manchester United this summer
- Meghan Markle Reportedly Losing Friends Since Joining The Royal Family
- North Carolina feels first bite of mammoth Hurricane Florence
- Kshama Sawant responds to Jeff Bezos' $2 billion charitable fund
- HIGHLIGHTS: Seattle Storm Win 2018 WNBA Championship
- Verizon 5G Home Internet service arrives in select cities on October 1
- Fall out from Kaepernick Nike ad continues
- Two Russians accused by United Kingdom in spy poisoning to give interview