Turkey’s Finance Minister to meet London bankers to attract investments

Turkish Finance Minister Mehmet Simsek is scheduled to hold investor meetings in London on October 3 and 4 in bid to bolster Turkey's economic prospects and reverse a prolonged exodus of foreign investment, Reuters reported on Thursday, attributing the news to five London bankers. Turkish Treasury has not yet responded to requests for comment.

Mehmet Simsek, a highly regarded policy maker, assumed his role in June, following the currency crisis of 2021 that was attributed, in part, to President Tayyip Erdogan's unconventional policies. As part of his efforts to reorient Turkey's economic trajectory, Simsek recently met with investors in New York.

This London engagement is just one stop in his global outreach, as Simsek is also expected to hold similar talks with investors in Asian markets before the year's end. These meetings, coupled with the government's medium-term program unveiled earlier this month, are integral to the country's strategy to rekindle international investor interest.

Over the past five years, foreign investors have been steadily retreating from the Turkish market due to low-interest rates despite mounting inflation. However, the central bank has taken drastic measures since Simsek's appointment, raising rates by a substantial 2,150 basis points in a significant policy pivot.

Simsek has emphasized that the economic program he spearheads enjoys President Erdogan's full support. Erdogan has also expressed confidence in the new economic team, which includes Hafize Gaye Erkan, the first woman to serve as the central bank's governor.

Additionally, Turkish authorities have implemented various fiscal measures to curb budget deficits, dampen domestic demand, phase out a costly depreciation-protected deposit scheme, and bolster foreign exchange reserves to preempt any potential current account deficit crises.

Goldman Sachs has acknowledged the possibility of outperforming the forward pricing of the Turkish lira and suggested that the carry trade might regain traction. The investment bank also noted that, despite the series of rate hikes, real interest rates in Turkey, although still negative, are projected to turn positive by the end of the year.