Turkey: Lira slumps to record low after Erdogan fires three Central Bank governors
The Turkish Lira slumped to another record low on Thursday after Turkey's Recep Tayyip Erdogan fired three Central Bank monetary policy committee (MPC) members, according to local reports.
Turkey's Official Gazette said the three governors fired by Erdogan late on Wednesday were Semih Tumen and Ugur Namik Kucuk, along with another MPC member, Abdullah Yavas.
New MEE newsletter: Jerusalem Dispatch
Sign up to get the latest insights and analysis on Israel-Palestine, alongside Turkey Unpacked and other MEE newsletters
Erdogan has since replaced two out of the three governors. They include Taha Cakmak as a deputy central bank governor and Yusuf Tuna as an MPC member.
The decision to fire the three MPC members came after a picture was posted showing Erdogan meeting central bank governor Sahap Kavcioglu on Wednesday evening.
A source told Reuters that both Yavas and Kucuk had opposed some decisions taken by the MPC. Kucuk had also been against reserve sales to support the lira in previous years.
The source quoted Kucuk as saying: "The lira's stability, reputation and the price stability that comes with these are prerequisites for economic growth and development based on productivity. Growth provided by other means will not be permanent.
"'If you keep the interest rate lower than where it needs to be today, the level you have to raise the interest rate to tomorrow will be higher than the level it needs to be today.'"
Analysts have also said that Erdogan's latest decision is further evidence of his political interference in Turkey's banking system and opposition to interest rates.
The lira weakened to a record low of 9.19 against the dollar after the announcement, a loss of 1 percent on the day.
It has weakened about 19 percent so far this year, driven by concerns about monetary policy.
Last week, three sources told Reuters that Erdogan was losing confidence in Kavcioglu, who was hired after his predecessor was fired seven months prior by the Turkish president.
Erdogan has also made a series of changes to the central bank in recent years.
And over the last two and half years, Erdogan has fired three bank governors, harming the lira and disrupting the predictability and credibility of monetary policy in Turkey
Middle East Eye delivers independent and unrivalled coverage and analysis of the Middle East, North Africa and beyond. To learn more about republishing this content and the associated fees, please fill out this form. More about MEE can be found here.
