- President Erdogan fires Naci Agbal, CBRT Governor.
- CBRT rose rates by 200 basis points on Thursday to 19%.
- New governor, a critic of high rates, likely to push for a dovish turn in monetary policy.
Turkey’s President Recep Tayyip Erdogan abruptly fired the governor of the Central Bank of the Republic of Turkey (CBRT), Naci Abgal, late on Friday. Erdogan’s decision comes after the central bank rose rates by 200 points to 19% amid upside risk to inflation expectations.
Agbal was appointed in November and worked to restore credibility among investors. The lira was tumbling in November, with USD/TRY trading at record highs above 8.50. On Friday, it closed at 7.19. During Agbal’s tenure, the lira appreciated 15% versus the US dollar, and the repo rate rose by 875 points.
Since July 2019, Erdogan has fired three central bank governors. The new CBRT chief will be Sahpa Kavcioglu, a critic of the current tight policy. On Monday, he will probably have to announce measures to prevent sharp fluctuations on the exchange rate.
“It looks like the central bank’s efforts to fight the country’s inflation problem may come to an end, and a messy balance of payments crisis has become (once again) a real possibility”, said Jason Tuvey, Senior Emerging Markets Economist at Capital Economics.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.