One day after a newly sworn in Turkish president Erdogan, now with sweeping executive powers, shocked investors and sent the lira plunging when he unveiled a new cabinet that featured his son in law Berat Albayrak as the country’s new Minister of Finance and Treasury while excluding the current Deputy Prime Minister Mehmet Simsek, who was the only market-friendly official and the de facto economic czar, overnight Erdogan completed his sweep of economic dominance with a presidential decree which granted the president the power to appoint the central bank governor, deputies and monetary policy committee members for a 4-year period.

Three presidential decrees, published in the country’s Official Gazette, set out the structure of the new presidential system and the regulations governing the appointment of officials by the president. This replaces the existing framework according to which there was a five-year term for the central bank head, however the decree scrapped this stipulation as well as a requirement that deputy governors have a decade of experience.

Most saw this final takeover of a supposedly independent central bank by the president coming, after an earlier decree which targeted the monetary institution, allowing governors to be appointed without a prior governor recommendation.

Monday’s announcements deepened worries about the bank’s independence and triggered near record losses in the lira, which has been hit this year by concerns about Erdogan’s drive for greater control over monetary policy.

Investors were spooked by Erdogan – a self-described “enemy of interest rates” – and sold off Turkish assets on concerns that his push for cheaper borrowing costs will mean he will look to take greater control of monetary policy under the new system, unleashing even higher inflation and sending the lira soaring.

“I’d have expected Erdogan to have learned the bitter cost of messing with markets,” Atilla Yesilada, economist at GlobalSource Partners in Istanbul, told Bloomberg in an emailed report. “Apparently, he does think that with his new powers he can best the markets.”

As a reminder, on Monday Erdogan was sworn for a five-year term as president with enhanced powers after winning re-election under an amended constitution, setting the stage for him to follow through on a pre-vote promise to take more direct control over monetary policy. The 64-year-old leader has repeatedly clashed with the central bank over borrowing costs that he is determined to keep low under almost all circumstances.

Erdogan’s power grab immediately spooked Turkey’s largest business association, Tusiad, which has been urging the government to respect the rule of law and independence of institutions, cautioned that central bank autonomy “is very important for a strong Turkish economy.”

As Bloomberg notes,iIt isn’t clear how the central bank will respond to price gains running more than triple the official target at its next monetary policy meeting on July 24.

“Key is independence from influence and ability to do what is needed. Given the tough decisions needed to be taken, with the new cabinet and changes with decrees, that ability may have been impaired, especially on increasing interest rates to control inflation,” according to Michel Danechi, a portfolio manager at Vedra Partners Limited in London.

The markets, however, had no interest in waiting, and one day after the Turkish lira suffered its biggest drop since the failed Turkish coup of 2016, the TRY resumed its slide folowing news of the latest decree, sending it near all time lows after it had recouped much of yesterday’s losses, as it becomes clear to investors that Erdogan no longer cares about the viability of the overall economy, and instead plans on making its his own family fiefdom, no matter the cost.

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