President Erdogan's son-in-law quits as economy czar, spurs Lira rally

Berat Albayrak resigns a day after central bank chief fired

Berat Albayrak, the son-in-law of Turkish President Recep Tayyip Erdogan, unexpectedly resigned as the country’s economy czar a day after the central bank governor was fired, igniting fresh political turmoil. The lira rallied as investors found relief in the upheaval.

Albayrak, 42, cited unspecified health reasons for his decision to step down as finance and treasury minister, according to a statement posted on his verified Instagram account on Sunday. The announcement came after Erdogan replaced central bank Governor Murat Uysal with former Finance Minister Naci Agbal, a critic of Albayrak’s economic management.

If Erdogan accepts the resignation, that could pave the way for a dramatic shift in economic policy, as well as a political realignment in the ruling party. Albayrak was widely viewed as being groomed to be a potential successor for Erdogan, who’s led Turkey as prime minister or president since 2003. The lira rallied as much as 6 per cent against the dollar, the most in over two years, indicating investor optimism that the changes might presage a return to economic orthodoxy. 

Albayrak’s term was characterised by mostly futile efforts to control the value of the currency without resorting to raising interest rates, in line with Erdogan’s widely discredited view that higher interest rates lead to higher inflation. Most economists think the opposite is true.

While Erdogan has yet to say whether he will accept the resignation, signs are mounting that he is looking for a successor. The president convened a late night meeting with Agbal and former Deputy Prime Minister Nurettin Canikli to discuss central bank policy, according to people with direct knowledge of the matter.