Turkish Lira Falls by 17 Percent After Dismissal of the Central Bank’s Chief Executive

The Turkish lira fell more than 17 percent against the US dollar on Monday after President Recep Tayyip Erdogan fired the country’s central bank’s boss on Saturday.

That decision came a few days after the central bank raised the policy rate by 2 percentage points to 19 percent. Sahap Kavcioglu has since been appointed as a replacement for the dismissed Naci Agbal.

Agbal was known as Erdogan’s confidant when he took office in November and was seen as someone who could restore confidence in the lira, the worst-performing currency in the emerging countries. He served as Secretary of the Treasury from 2015 to 2018 and then headed the presidential office in charge of strategy and budget.

As bank president, Agbal tried to bring down high inflation in Turkey by raising interest rates. However, Erdogan has repeatedly insisted on keeping interest rates low.

In November, Murat Uysal also had to leave the field as bank governor. No reason was then given for the replacement, but an AK Party official stated that Uysal was held responsible for the lira’s dive.