On Monday, the markets reacted in the opposite direction to the announcements of Turkey's new super minister of economy and finance, Mehmet Simsek. Despite pithy words from the new "economic czar" on Sunday, the lira posted losses on Monday. While 20.9 lira had to be paid for a dollar on Friday, it was already 21.22 lira at the beginning of the week, marking a new record low. Dollar-denominated government bonds made gains. Stocks were in demand on the Istanbul Stock Exchange. The ISE 100 index has risen by about 25 percent since May 20, shortly before Erdogan's re-election, and is once again hovering near historic highs.

Andreas Mihm

Business correspondent for Austria, East-Central, Southeastern Europe and Turkey, based in Vienna.

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Simsek said on Sunday that "fiscal discipline and ensuring price stability for sustained high growth will be our main objectives." Fiscal policy and structural reforms would help the central bank bring down inflation. In October, it reached almost 86 percent, the highest level in 24 years. Economists also blame a failed policy of lowering interest rates by the central bank, which is under the influence of President Recep Tayyip Erdogan.

In May, the rise in the cost of living slowed down. According to figures published on Monday by the statistics office, it was 39.6 percent, down from 43.7 percent in the previous month. However, the figures are distorted, as the government allocated up to 25 cubic meters of gas free of charge to households in the election month of May. The price of natural gas, which accounts for 2.9 percent of the basket of goods used to determine inflation, has been set to zero.

Residential prices, which include natural gas, fell by 13.8 percent on a monthly basis. It was the only group of goods for which prices recorded a decrease, reducing the monthly value by 2.09 points. Spending on clothing and footwear, as well as restaurant and hotel prices, recorded the strongest increase. The price index of domestic producers in May was 40.76 percent higher than a year earlier.

The new finance minister is expected to make a U-turn in economic policy, including rising interest rates, which should also stabilize the lira, which is under pressure. "Turkey has no choice but to return to a rational base," he said. In the future, "macroeconomic financial stability will be given priority". However, the lira exchange rates at the beginning of the week show that the destroyed confidence of the financial markets cannot be restored from one day to the next.