Confusion affects Turkish markets
ISTANBUL (Reuters) – Turkey’s bonds, currency and stocks weakened yesterday on confusion over who will lead the central bank after ambiguous comments from the government and the president. Uncertainty grew as President Ahmet Necdet Sezer said he had not received a decree from the government proposing interim governor Erdem Basci as permanent head, as economic officials had said he had done and investors had expected. That sent the lira down 1 percent on the day, although it later recouped some of its losses to close 0.5 percent weaker at 1.3380 to the dollar on the interbank market. It weakened further in Wednesday-dated trade. «To me this is clearly a very negative signal… It’s problematic that this has not been sorted out and we have to have this public charade,» Lars Christensen, senior analyst at Danske Bank, said. Bond prices also fell on the secondary debt market. Sureyya Serdengecti left the governorship on March 14, and was replaced by Basci as interim head. The next day the government presented a candidate to Sezer for approval, widely expected to have been Basci. The president’s short statement gave no other details, while Prime Minister Recep Tayyip Erdogan said subsequently that the government had presented a decree to the president, although he declined to say whose name was on it. Analysts say a conflict between the secular ideals Sezer seeks to defend and those of a candidate chosen by the Islamist-rooted AK Party government could be slowing the selection process. Sezer, who has not shied from using his veto to stymie AK Party plans in the past, has the power to block the government’s nomination. Istanbul’s main stock index closed down 0.1 percent at 44,399.4 points, having earlier fallen as much as 1.8 percent. The index has risen 12 percent this year.
