The Turkish lira fell to a record low against the dollar on Thursday after President Recep Tayyip Erdogan fired senior central bank officials.
Erdogan has fired two deputy central bank governors, Semih Tumen and Ugur Namik Kucuk, and Abdullah Yavas, a member of the bank’s monetary policy committee, the Official Gazette reported. Taha Jakmak has been appointed Deputy Governor of the Bank and Youssef Tuna a Member of the Monetary Policy Committee.
Turkish media report that Kucuk opposed the bank’s previous monthly decision to cut the key interest rate by one percentage point, at Erdogan’s request to lower interest rates on loans to boost growth.
Economists generally view higher interest rates as a constraint on inflation, but the Turkish president has repeatedly said the opposite, that higher interest rates lead to higher prices.
The lira fell 1% to 9.19 overnight. Early on Thursday, it was trading at 9.14 to the dollar.
Since the beginning of the year, the lira has lost about 19% of its value.
The change in bank officials came hours after Erdogan met with bank governor Shihab Kavcioglu.
The Turkish economy did not fully recover from the currency crisis in 2018, when it was hit by a coronavirus pandemic, leading to rising inflation and unemployment.
Source: Associated Press