Turkish lira down 17 percent against the dollar after Erdogan fires central bank governor


Published: 2021-03-22 09:52

Last Updated: 2021-04-17 02:12

Source: BBC
Source: BBC

The Turkish lira fell by more than 17 percent against the dollar Monday in the foreign exchange market after President Recep Tayyip Erdogan's decision to dismiss the central bank governor.

The Turkish currency was trading at 8.47 lira to the dollar on Monday morning in Asia, compared to 7.22 lira per dollar at the end of last week.

Saturday, Turkey appeared on the brink of a new wave of economic turmoil, after Erdogan sacked Central Bank Governor Naji Iqbal from his post and replaced him as a former deputy from the ruling party.

The presidential decree, issued late Friday, did not explain why Erdogan had appointed Shihab Qafcioglu to the post in place of Iqbal.

But the decision came a day after the central bank dramatically raised the key interest rate to 19 percent to counter inflation.

Qafcioglu had written articles in a pro-government newspaper in which he strongly criticized Iqbal's tendency to raise interest rates.

Analysts said the new central bank chief is supportive of Erdogan's view that raising interest rates leads to inflation.

Erdogan's determination to avoid high interest rates has remained a constant of Turkey's policies. He once described it as "the mother and father of all evils" and reiterated in January that he was "totally opposed" to raising interest rates.

In a February article, the new central bank chief Kavsioglu noted that high interest rates "indirectly" lead to higher inflation.

Kavçioglu has become the fourth central bank chief appointed by Erdogan since July 2019. He is currently facing the task of achieving Erdogan's goal of reducing the annual interest rate to five percent by the date of Turkey's next elections in 2023.