Pascal Arogorn Ibe
Turkey’s President Recep Tayyip Erdogan has fired the governor of the country’s central bank and replaced him with a former finance minister after a record slump in the lira in recent months raised the spectre of a currency crisis.
Murat Uysal was just 16 months into his four-year term at the helm of the central bank when he was dismissed by presidential decree in the early hours of Saturday, with no reason given.
Mr Uysal had withstood criticism from investors for slashing interest rates even as the currency lost more than 30 per cent of its value against the dollar this year in what was widely seen as a concession to Mr Erdogan, who has demanded the bank keep rates low to spur economic growth, despite double-digit inflation.
The dramatic cutting cycle took Turkey’s main policy rate down to 8.25 per cent from 24 per cent over the course of a year. In September, the central bank reversed course and raised interest rates by 200 basis points as the lira began a steep decline, but since then it has relied on other tools to tighten monetary policy without touching the benchmark rate.
Mr Uysal will be replaced by Naci Agbal, who served as Mr Erdogan’s finance minister between 2015 and 2018 and is now the head of the presidential budget office.
The overnight removal of a central bank governor echoed the July 2019 sacking of Mr Uysal’s predecessor, Murat Cetinkaya, who Mr Erdogan fired for failing to reduce high interest rates that had helped underpin the lira in the wake of a currency shock in 2018.
The latest firing is likely to raise fresh concerns over Mr Erdogan’s interference in monetary policy at the nominally independent central bank.
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