Turkish lira falls in volatile trading after central bank chief replaced


Turkey’s lira dropped for a second day after President Recep Tayyip Erdoğan’s dismissal of the governor of the central bank at the weekend led to a mass exodus of capital on Monday. The lira was trading down 0.3 percent at 7.81 per dollar at 10:42 a.m. local time in Istanbul, with its price varying sharply between 7.74 and 7.94 per dollar. It fell as much as 15 percent on Monday, nearing a record low, before closing the day with losses of 8.4 percent. Erdoğan’s dismissal of central bank governor Naci Ağbal on Friday night, the day after he hiked interest rates by 2 percentage points to 19 percent, has underscored to investors that Turkey’s top financial institution cannot operate free of political interference. Erdoğan brought in Şahap Kavcıoğlu, a former banker, newspaper columnist and parliamentarian for his Justice and Development Party (AKP), who has advocated cuts to interest rates. State-run banks intervened in the currency markets on Monday to help keep the lira’s losses contained, according to traders cited by news outlets including Bloomberg. It was not immediately clear if they continued to be active in the markets on Tuesday. Erdoğan, who says high interest rates are inflationary, has sacked three central bank governors in less than two years after giving himself the power to hire and fire senior personnel when gaining vast new presidential powers in 2018.



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