Turkish President Recep Tayyip Erdogan fired the country’s central bank governor, the second time in 16 months he’s ousted the top monetary official, as a series of interest rate increases failed to halt the lira’s slide to a record low. Erdogan appointed former Finance Minister Naci Agbal to replace Murat Uysal, who had run the central bank for just over a year.
The decision to replace Murat Uysal as governor was made by presidential decree, which was announced in the country's Official Gazette. It was not immediately clear why Uysal had been replaced. The lira closed at 8.5445 against the dollar on Friday after a touching record low of 8.58, despite dollar weakness as votes were still being counted in the U.S. election.
Agbal has no prior experience in in monetary policy. He was one of the earlier members of Erdogan’s ruling party and maintained his standing with the Turkish leader despite disagreements over policy making over the past years. The Turkish president casts a long shadow over monetary policy and believes that high borrowing costs fuel inflation. Most central bankers around the world believe the opposite is true.
Uysal’s abrupt removal follows weeks of declines in the currency, which fell to a record low on Friday. The lira is the worst-performing emerging markets currency of 2020, falling more than 30% against the dollar.
Bearishness towards the lira stems from concerns about possible Western sanctions against Turkey, depleted reserves, high inflation and political interference in monetary policy. Analysts are concerned that Turkey's ties could suffer after Democrat Joe Biden has become U.S. president.
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