Turkish lira hits record low after Erdogan sacks central bank officials

The Turkish lira hit a record low overnight after President Recep Tayyip Erdogan ordered a new severance at the country’s central bank.

Erdogan dismissed the two vice-presidents in a late-night decree announced hours after meeting bank governor Sahap Cavsiogur.

One of them, Ugur Namik Kucuk, is the only member of the eight-member monetary policy committee of the bank. Rate cut Last month, it shocked international investors, according to two people familiar with the matter.

“It’s a shame for him and the country because he voted against the decision to cut interest rates,” said an Istanbul-based banker.

Mr Kukuku also opposed the controversial policy of selling banks’ foreign exchange reserves in a fateful bid to support Lira, bankers added. The policy began in early 2019 and continued until the end of last year.

The second deputy governor, Semih Tumen, was the subject of reports that he could be appointed to take over from Kavcioglu.

The president also dismissed Abdullah Yabas, a longtime member of the Monetary Policy Committee, who had faced criticism in the Turkish media for living in the United States.

Lira that was already there Under pressure Overnight trading fell 1% to $ 1 TL 9.19 due to the stronger US dollar and investor concerns about Turkey’s economic and foreign policy. The currency has been bruised for several years and has lost 59% of its value against the dollar since its inception in 2018.

Prime Minister Erdogan, who has ruled Turkey for almost 20 years, has recently gained unprecedented control over a nominally independent central bank after taking steps to strengthen his power.

The president, who opposes high interest rates, has clashed with a series of governors as he has sought to prioritize high growth at all costs, including rising inflation. He has fired the central bank chief three times since mid-2019 and many other officials.

Lira was under pressure after Reuters last week report Erdogan lost confidence in the March-appointed Kabushioguru, despite cutting the bank’s benchmark interest rate to 18% last month. Annual inflation It was running at 19 percent.

The president’s correspondent rejected the claim, and the Wednesday meeting between Prime Minister Erdogan and Kabushioguru announced by Cheong Wa Dae is likely to be interpreted as a sign of support for the governor.

Kukuku was a famous person in the international financial world. A former Chief Economist at Garanti Bank, he often took the lead in answering questions from foreign investors on his monthly phone calls. Market participants were impressed with his absence from the meeting last week.

Former employee of the state-owned Ziraat Bank and Turkish banking regulator Taha Kakumak has been appointed as the new vice-president. Yusuf Tuna, a scholar at the Istanbul University of Commerce, has been appointed to the Monetary Policy Committee.

Turkish lira hits record low after Erdogan sacks central bank officials Source link Turkish lira hits record low after Erdogan sacks central bank officials

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