ECONOMY

Central bank head must inspire confidence in investors: Sabanci

ANKARA (Reuters) – Turkey’s top business group TUSIAD has called on the government to pick a consensus central bank candidate who can provide confidence to domestic and foreign markets, a newspaper said yesterday. Markets have been rattled by the Islamist-rooted government’s failure to appoint a successor to respected Sureyya Serdengecti who retired in mid-March after five years at the helm of the central bank. Last week, Turkey’s secularist president vetoed a candidate apparently because he headed an interest-rate-free Islamic bank. «We criticize the central bank appointment process,» Omer Sabanci, head of the Turkish Industrialists’ and Businessmen’s Association (TUSIAD), said in an interview with the Sabah daily. «There should be agreement on a name which could give confidence both to domestic and foreign markets,» said Sabanci, a member of one of Turkey’s wealthiest business dynasties. President Ahmet Necdet Sezer on March 23 rejected the ruling Justice and Development Party’s (AKP) choices for governor and two deputies. The lira currency, bonds and the stock market have reacted negatively. Analysts puzzled Analysts have been puzzled as to why Serdengecti, who oversaw Turkey’s recovery from a deep financial crisis in 2001 with the help of the IMF, was not re-appointed. He was appointed by the previous secularist government and is known to have had cool relations with the AKP. The bank has since been headed by interim governor Erdem Basci, who is close to the AKP. «The central bank had a very successful governor and management and this was accepted by everybody. We wonder why Sureyya Serdengecti was not appointed again. We would like to know if he has a defect. Nobody is perfect, of course, but he was the person everyone agreed on,» said Sabanci. Sabanci, like some financial analysts, raised concern over keeping an interim person as head of the bank for too long. The AKP has filled several top positions by proxy due to failure to obtain approval from Sezer. «The central bank is a very sensitive institution. There are many institutions managed by proxy at the moment, but the central bank cannot afford such interim management,» he said. The lira currency hit a fresh low for 2006 on Wednesday, partly due to the continued uncertainty at the central bank. The lira traded at 1.3625 to the dollar on the interbank market yesterday – levels not seen since December 2005, according to Reuters data – after hitting its lowest level of 2006 in late trade on Tuesday.