ANKARA, July 25 (Xinhua) -- Turkey's new economy chief has promised fiscal discipline, anti-inflation measures, an independent central bank and structural reforms, all aiming to regain market confidence and bring the economy back on track as interest rates are kept on hold.
Turkey's central bank decided on Tuesday to keep interest rates on hold while markets were expecting a hike, causing the embattled Turkish currency lira to plunge instantly to 4.90 against the U.S. dollar, a 3.45-percent drop compared with Monday.
This decision was considered a critical test of whether the bank can remain independent from re-elected President Recep Tayyip Erdogan, who described interest rates as "the mother and father of all evil."
"Turkey will strongly continue its dialogue with international rating organizations, banks and investors," Treasury and Finance Minister Berat Albayrak said during his visit to Argentina for a G20 meeting, where he underscored his message that Turkey remains market-friendly.
Albayrak, the 40-year-old former energy minister, has been put at the helm of the powerful new ministry by his father-in-law, President Erdogan.
"The statements made by the new minister are positive and market-friendly ones," said senior financial analyst Enver Erkan, pointing out that markets were awaiting now concrete actions on promises made by Albayrak and the new administration.
"These are all positive steps but markets want to be sure that realistic action is taken," said Erkan, who was among analysts expecting a 125-basis point hike in interest rates on Tuesday.
This Istanbul-based analyst with GMC Forex also called on the new team to organize rapidly a visit to meet investors in London, one of world's most powerful financial centers, and convince them to put Turkish economy back on track with orthodox economic policies and prevent capital from leaving the country.
The Turkish economy has recently grown by 7.4 percent, while the current account deficit is rising. The lira has lost more than a fifth of its value against the U.S. dollar and the euro since the beginning of this year, and inflation is at a record level of 15 percent.
But the growth has been fed, according to experts, by potentially unsustainable public and private borrowing, putting major Turkish companies in a difficult spot.
Investors are worried about the independence of the Turkish central bank as last week, the president issued a decree allowing him to appoint the bank's two highest officials.
But instead of battling markets, Albayrak chose a friendly tone, seemingly trying to convince them of the importance of Turkey and to ease investor concerns by advocating support for the central bank.
"We will not fight," but will conduct strong dialogue with the markets on a win-win principle, Albayrak said, noting that they will give ear to academics, economy commentators and figures from the media.
"Nobody is at the point of imposing ideas onto others. We will express our theses in the right way. For this term, the key and critical word of this communication will be harmony," he said in Argentina.
The government will "ensure recovery in inflation by taking strong steps," he assured.
Albayrak also said Turkey will be in line with market realities amid reports in western media that the Turkish economy is overheating, a situation that would possibly lead the country to seek international financial help, a worst case scenario.
"We have to put forward the correct things applied in the economic and financial system in the world. Now with the new code of this century, with strategic steps, we need to adapt Turkey's infrastructure into the world system," said the minister.
Meanwhile, the rising inflation has hit consumers hard as prices, especially of food, went on a sharp increase. It effects everybody and surely the lower middle-class that helped Erdogan's rise to power 15 years ago and maintained him there ever since.
